<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
(Name of Subject Company)
WHITMAN'S CANDIES, INC.
WC-RMA CORP.
(Bidders)
COMMON STOCK, PAR VALUE $.03 PER SHARE
(Title of Class of Securities)
774678403
(CUSIP Number of Class of Securities)
------------------------
MR. THOMAS S. WARD
CO-PRESIDENT
WHITMAN'S CANDIES, INC.
1000 WALNUT STREET
SUITE 900
KANSAS CITY, MISSOURI 64106
TELEPHONE: (816) 842-9240
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
WITH A COPY TO:
DAVID W. PRESTON, ESQ.
LATHROP & GAGE L.C.
2345 GRAND BOULEVARD
SUITE 2300
KANSAS CITY, MISSOURI 64108
TELEPHONE: (816) 292-2000
CALCULATION OF FILING FEE:
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<S> <C>
$15,815,944 $3,163
</TABLE>
* For purposes of calculating the filing fee only. This calculation assumes
the purchase of an aggregate of 2,750,599 shares of Common Stock, par value
$.03 per share (the "Shares") of the subject company at a price of $5.75 per
Share, net to the seller in cash, without interest thereon. The amount
reflects the purchase of 2,599,599 outstanding Shares and 151,000 Shares
issuable pursuant to the exercise of outstanding and presently exercisable
options.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate value of cash offered by the bidders.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
</TABLE>
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1. NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Whitman's Candies, Inc. (E.I.N.: 43-1638048)
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) /X/
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
BK, WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(e) OR 2(f)
/ /
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Missouri
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
/ /
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Not Applicable
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10. TYPE OF REPORTING PERSON
CO
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2
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1. NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WC-RMA CORP. (E.I.N.: 43-1849507)
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) /X/
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
AF
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(e) or 2(f)
/ /
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None.
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
/ /
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Not Applicable.
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10. TYPE OF REPORTING PERSON
CO
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3
<PAGE>
The item numbers and responses thereto set forth below are in accordance
with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Rocky Mountain Chocolate Factory,
Inc., a Colorado corporation (the "Company"). The address of the Company's
principal executive offices is 265 Turner Drive, Durango, Colorado 81301.
(b) This Tender Offer Statement on Schedule 14D-1 relates to the offer by
WC-RMA Corp. (the "Purchaser"), a Delaware corporation and a wholly owned
subsidiary of Whitman's Candies, Inc., a Missouri corporation (the "Parent"), to
purchase all outstanding shares of Common Stock, par value $.03 per share (the
"Shares") of the Company, at a price of $5.75 per Share, net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated May 10, 1999 (the "Offer to Purchase"),
and in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, constitute the "Offer"). The information set forth under
"Introduction" in the Offer to Purchase annexed hereto as Exhibit (a)(1) is
incorporated herein by reference.
(c) The information set forth in Section 6 "Price Range of Shares;
Dividends" in the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (f)-(g) This Statement is being filed by the Purchaser and the
Parent. The information set forth in the Offer to Purchase under "Introduction,"
in Section 9 "Certain Information Concerning the Purchaser and the Parent" and
in Schedule I is incorporated herein by reference.
(e) During the last five years, neither the Purchaser, the Parent nor any
persons controlling the Purchaser, nor, to the best knowledge of the Purchaser
or the Parent, any of the persons listed on Schedule I to the Offer to Purchase
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth under "Introduction," in Section 11
"Background of the Offer; Contacts with the Company," in Section 8 "Certain
Information Concerning the Company" and in Section 9 "Certain Information
Concerning the Purchaser and the Parent" in the Offer to Purchase is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth under "Introduction" and in Section 10
"Source and Amount of Funds" in the Offer to Purchase is incorporated herein by
reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(d) The information set forth under "Introduction," and in Section 12
"Purpose of the Offer; Proposed Merger; Plans for the Company" in the Offer to
Purchase is incorporated herein by reference.
(e)-(g) The information set forth in Section 12 "Purpose of the Offer;
Proposed Merger; Plans for the Company," and in Section 7 "Effect on the Market
for the Shares, Stock Exchange Listing and Exchange Act Registration" in the
Offer to Purchase is incorporated herein by reference.
4
<PAGE>
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction" and in Section 9 "Certain Information Concerning the Purchaser
and the Parent" is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in Section 10 "Source and Amount of Funds," and
Section 12 "Purpose of the Offer; The Proposed Merger; Plans for the Company" in
the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16 "Fees and Expenses" in the Offer to
Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 "Certain Information Concerning the
Purchaser and the Parent" is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth under "Introduction" and in Section 15
"Certain Legal Matters; Regulatory Approvals" in the Offer to Purchase is
incorporated herein by reference.
(d)-(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase, dated May 10, 1999.
(2) Letter of Transmittal.
(3) Notice of Guaranteed Delivery.
(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.
(7) Text of Press Release issued by Whitman's Candies, Inc. on May 10, 1999.
(8) Summary Advertisement published in the national edition of THE WALL STREET JOURNAL
on May 11, 1999.
(b) Irrevocable Standby Letter of Credit.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
5
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
<TABLE>
<S> <C> <C>
Dated: May 10, 1999 WHITMAN'S CANDIES, INC.
By: /s/ THOMAS S. WARD
--------------------------------------
Name: Thomas S. Ward
Title: Co-President
WC-RMA CORP.
By: /s/ THOMAS S. WARD
--------------------------------------
Name: Thomas S. Ward
Title: Co-President
</TABLE>
6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ---------
<S> <C>
(a)(1) Offer to Purchase, dated May 10, 1999.
(2) Letter of Transmittal.
(3) Notice of Guaranteed Delivery.
(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(7) Text of Press Release issued by Whitman's Candies, Inc. on May 10, 1999.
(8) Summary Advertisement published in the national edition of THE WALL STREET JOURNAL on May 11, 1999.
(b) Irrevocable Standby Letter of Credit.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
7
<PAGE>
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
AT
$5.75 NET PER SHARE
BY
WC-RMA CORP.,
A WHOLLY-OWNED SUBSIDIARY OF
WHITMAN'S CANDIES, INC.
---------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
WEDNESDAY, JUNE 16, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1)THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN), A
NUMBER OF SHARES OF COMMON STOCK OF ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. (THE
"COMPANY"), PAR VALUE $0.03 PER SHARE (COLLECTIVELY, THE "SHARES"), WHICH, WHEN
ADDED TO THE SHARES THEN BENEFICIALLY OWNED BY WHITMAN'S CANDIES, INC. (THE
"PARENT"), WC-RMA CORP. (THE "PURCHASER") OR THEIR AFFILIATES, CONSTITUTES AT
LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES OUTSTANDING, ON A FULLY DILUTED
BASIS (THE "MINIMUM TENDER CONDITION"); (2) EXPIRATION OR TERMINATION OF THE
APPLICABLE WAITING PERIOD, IF ANY, UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT") (THE "HSR CONDITION"); (3)
THE COMPANY NOT HAVING ENTERED INTO OR EFFECTUATED ANY AGREEMENT OR TRANSACTION
WITH ANY PERSON OR ENTITY (INCLUDING ITS STOCKHOLDERS) OR TAKEN ANY ACTION
HAVING THE EFFECT OF IMPAIRING THE PURCHASER'S ABILITY TO ACQUIRE THE COMPANY OR
OTHERWISE DIMINISHING THE EXPECTED ECONOMIC VALUE TO THE PURCHASER OF THE
ACQUISITION OF THE COMPANY, AND THE COMPANY NOT POSTPONING ITS 1999 ANNUAL
MEETING OF STOCKHOLDERS OR TAKING ANY OTHER ACTION THAT WOULD IMPEDE THE
PARENT'S ABILITY TO NOMINATE ONE OR MORE DIRECTORS FOR ELECTION OR ITS ABILITY
TO MAKE ANY OTHER PROPOSALS TO BE VOTED UPON BY STOCKHOLDERS AT SUCH MEETING
(THE "DEFENSIVE ACTION CONDITION"); AND (4) SATISFACTION OF THE OTHER CONDITIONS
SPECIFIED IN SECTION 14 HEREOF. SEE SECTION 14.
------------------------
May 10, 1999
THE DEALER MANAGER FOR THE OFFER IS:
[NESBITT BURNS SECURITIES INC. LOGO]
<PAGE>
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile thereof) and any other required documents to the
Depositary and either deliver the certificates for such Shares to the Depositary
along with the Letter of Transmittal (or a facsimile thereof) or deliver such
Shares pursuant to the procedure for book-entry transfer set forth in Section 3
prior to the expiration of the Offer or (ii) request such stockholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder having Shares registered in the
name of a broker, dealer, commercial bank, trust company or other nominee must
contact such person if he or she desires to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply with the procedures
for book-entry transfer described in this Offer to Purchase on a timely basis,
may tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their addresses and
telephone number set forth on the back cover of this Offer to Purchase.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.............................................................. 1
1. Terms of the Offer; Expiration Date.................................. 4
2. Acceptance for Payment and Payment for Shares........................ 5
3. Procedures for Tendering Shares...................................... 6
4. Withdrawal Rights.................................................... 9
5. Certain Federal Income Tax Consequences.............................. 9
6. Price Range of Shares; Dividends..................................... 11
7. Effect of the Offer on the Market for the Shares, Stock Exchange
Listing and
Exchange Act Registration; Margin Regulations....................... 11
8. Certain Information Concerning the Company........................... 12
9. Certain Information Concerning the Purchaser and the Parent.......... 14
10. Source and Amount of Funds........................................... 17
11. Background of the Offer; Contacts with the Company................... 18
12. Purpose of the Offer; Proposed Merger; Plans for the Company......... 20
13. Dividends and Distributions.......................................... 22
14. Conditions of the Offer.............................................. 22
15. Certain Legal Matters and Regulatory Approvals....................... 26
16. Fees and Expenses.................................................... 28
17. Miscellaneous........................................................ 28
Schedule I-- Information Concerning the Directors and Executive Officers
of the Parent and the Purchaser......................................... 30
</TABLE>
iii
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.:
INTRODUCTION
WC-RMA Corp. (the "Purchaser") hereby offers to purchase any and all of the
outstanding shares of Common Stock, par value $0.03 per share (the "Shares"), of
Rocky Mountain Chocolate Factory, Inc., a Colorado corporation (the "Company"),
at a price of $5.75 per Share, net to the seller in cash, without interest
thereon (the "Offer Price"), upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer"). The Purchaser is
a Delaware corporation and a wholly-owned subsidiary of Whitman's Candies, Inc.
, a Missouri corporation (the "Parent").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes upon the purchase of Shares by the Purchaser
pursuant to the Offer. However, any tendering stockholder or other payee who
fails to complete and sign the Substitute Form W-9 that is included in the
Letter of Transmittal may be subject to a required backup federal tax
withholding of 31% of the gross proceeds payable to such stockholder or other
payee pursuant to the Offer. See Section 3. The Purchaser will pay all charges
and expenses of Nesbitt Burns Securities Inc., as Dealer Manager (the "Dealer
Manager"), Harris Trust Company of New York, as Depositary (the "Depositary"),
and D.F. King & Co., Inc., as Information Agent (the "Information Agent"),
incurred in connection with the Offer. See Section 16. For purposes of this
Offer to Purchase, references to "Section" are references to a section of this
Offer to Purchase, unless the context otherwise requires.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. The Purchaser currently intends to propose, and to
seek to have the Company consummate as soon as practicable after consummation of
the Offer, a merger or similar business combination (the "Proposed Merger") with
the Purchaser or another direct or indirect subsidiary of the Parent, pursuant
to which each then outstanding Share (other than Shares held by the Parent, the
Purchaser or any other wholly-owned subsidiary of the Parent or any affiliate of
the Parent, Shares held in the treasury of the Company and Shares held by
stockholders who properly exercise appraisal rights under Colorado law) would be
converted into the right to receive in cash the price per Share paid by the
Purchaser pursuant to the Offer and the Company would become a wholly-owned
subsidiary of the Parent.
Although the Purchaser will seek to have the Company consummate the Proposed
Merger as soon as practicable after consummation of the Offer, if the Board of
Directors of the Company (the "Company Board") opposes the Offer and/or the
Proposed Merger, certain provisions of the Colorado Business Corporation Act
(the "BCA"), the Company's Articles of Incorporation, as amended (the "Company
Charter"), and the Company's By-Laws (the "By-Laws") may affect the ability of
the Purchaser to obtain control of the Company and to effect the Proposed
Merger. Depending on the Company's response to the Offer and the Proposed
Merger, the Parent and the Purchaser may take such further actions as they deem
appropriate to achieve its objective of acquiring control of the Company,
including conducting a proxy contest at the Company's 1999 Annual Meeting of
Stockholders (the "Company Annual Meeting") or at a special meeting of
stockholders of the Company (a "Company Special Meeting"). However, the Parent
and the Purchaser have not yet made any determination whether to do so.
Accordingly, the timing and final terms of the Proposed Merger will depend on a
variety of factors and legal requirements, the actions of the Company Board, the
number of Shares acquired by the Purchaser pursuant to the Offer, and whether
the Minimum Tender Condition, the HSR Condition, the Defensive Action Condition
and the other conditions to this Offer to Purchase specified in Section 14 are
satisfied or waived. For a discussion of certain appraisal rights that will be
available to stockholders upon consummation of the Proposed Merger, see Section
12.
1
<PAGE>
In connection with the Offer and the Proposed Merger, the Parent and the
Purchaser intend, if necessary, to nominate, and solicit proxies for the
election of, one or more nominees who support the Offer and the Proposed Merger
(the "Parent Nominees") to the Company Board at the Company Annual Meeting or a
Company Special Meeting and to solicit proxies for certain other proposals. The
Parent expects that, if elected, and subject to their fiduciary duties under
applicable law, the Parent Nominees would be proponents of action by the Company
Board to: recommend the Offer, approve the Proposed Merger and take any other
actions necessary to permit the Offer and the Proposed Merger to be consummated.
Such solicitation will be made pursuant to separate proxy materials complying
with the requirements of Section 14(a) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder (the "Exchange
Act").
The Purchaser may continue to seek to negotiate with the Company with
respect to the acquisition of the Company by the Purchaser. The Purchaser
reserves the right to amend the Offer upon entry into an acquisition agreement
regarding a business combination with the Company or otherwise or to negotiate
an acquisition agreement or other agreement regarding a business combination
with the Company not involving a tender offer.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE COMPANY ANNUAL MEETING OR
ANY COMPANY SPECIAL MEETING. ANY SUCH SOLICITATION WHICH THE PARENT AND/OR THE
PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY SOLICITATION
MATERIALS COMPLYING WITH ALL APPLICABLE REQUIREMENTS OF SECTION 14(a) OF THE
EXCHANGE ACT.
CERTAIN CONDITIONS TO THE OFFER
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the Expiration Date (as defined herein), a
number of Shares of common stock of the Company, par value $0.03 per share
(collectively, the "Shares"), which, when added to the shares then beneficially
owned by the Parent, the Purchaser or their affiliates, constitutes at least a
majority of the total number of Shares outstanding, on a fully diluted basis
(the "Minimum Tender Condition"); (2) expiration or termination of the
applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") (the "HSR Condition"); (3)
the Company not having entered into or effectuated any agreement or transaction
with any person or entity (including its stockholders), and the Company not
having postponed the Company Annual Meeting or taken any action having the
effect of impairing the Purchaser's ability to acquire the Company or otherwise
diminishing the expected economic value to the Purchaser of the acquisition of
the Company, or taking any other action that would impede the Parent's ability
to nominate one or more directors for election or its ability to make any other
proposals to be voted upon by stockholders at such meeting (the "Defensive
Action Condition"); and (4) satisfaction of the other conditions specified in
Section 14 hereof. See Section 14.
THE MINIMUM TENDER CONDITION. Consummation of the Offer is conditioned upon
there being validly tendered and not withdrawn prior to the Expiration Date, a
number of Shares, which, when added to the Shares then beneficially owned by the
Parent, the Purchaser or their affiliates, constitutes at least a majority of
the total number of Shares outstanding on a fully diluted basis. According to
the Company's Quarterly Report on Form 10-Q for the quarter ended November 30,
1998, as of January 5, 1999, there were 2,599,599 Shares issued and outstanding.
According to the Company's Annual Report on Form 10-K for the year ended
February 28, 1998, as of February 28, 1998, 151,000 Shares were issuable under
then outstanding and presently exercisable options. The Parent currently does
not beneficially own any Shares. Based on the foregoing and assuming that no
options were granted after February 28, 1998, and that no options were
exercised, expired or became exercisable from February 28, 1998, through the
date hereof, there would be 2,750,599 Shares outstanding on a fully diluted
basis and the number of Shares subject to the Offer and the Proposed Merger
would be 2,750,599. The actual number of Shares subject to the Offer
2
<PAGE>
will depend upon the facts as they exist on the date of the purchase or the
Effective Date. Based on this information, the Parent and the Purchaser
currently believe that approximately 1,375,300 Shares must be tendered and not
withdrawn to satisfy the Minimum Tender Condition.
THE HSR CONDITION. Consummation of the Offer is conditioned upon the
expiration or termination of the waiting period applicable to the acquisition of
Shares pursuant to the Offer under the HSR Act.
The Parent will file on the date hereof with the Federal Trade Commission
(the "FTC") and the Antitrust Division of the Department of Justice (the
"Antitrust Division") a Pre-merger Notification and Report Form under the HSR
Act with respect to the Offer. Accordingly, the waiting period under the HSR Act
applicable to the Offer will expire at 11:59 p.m., New York City time, on
Tuesday, May 25, 1999, unless prior to the expiration or termination of the
waiting period the FTC or the Antitrust Division extends the waiting period by
requesting additional information or documentary material from the Parent. If
such a request is made, the waiting period applicable to the Offer will expire
on the tenth calendar day after the date of substantial compliance by the Parent
with such request. Thereafter, the waiting period may be extended by court order
or by consent of the Parent. The waiting period under the HSR Act may be
terminated by the FTC and the Antitrust Division prior to its expiration. For
information with respect to approvals required to be obtained prior to the
consummation of the Offer, including under the HSR Act. See Section 15.
THE DEFENSIVE ACTION CONDITION. Consummation of the Offer is conditioned
upon the Company not having entered into or effectuated any agreement or
transaction with any person or entity (including its stockholders) or taken any
action having the effect of impairing the Purchaser's ability to acquire the
Company or otherwise diminishing the expected economic value to the Purchaser of
the acquisition of the Company, and the Company not postponing the Company
Annual Meeting or taking any other action that would impede the Parent's ability
to nominate one or more directors for election or its ability to make any other
proposals to be voted upon by stockholders at such meeting. In connection with
the Offer and Proposed Merger, the Parent and the Purchaser intend, if
necessary, to nominate, and solicit proxies for the election of, the Parent
Nominees to the Board at the Company Annual Meeting or any Company Special
Meeting and to solicit proxies for certain other proposals.
* * * * *
In the event the Offer is not consummated for any reason, or in the event
the Company takes any of the actions specified in the Defensive Action
Condition, the Purchaser and the Parent intend to explore all options which may
be available to them at such time, which may include without limitation
terminating this Offer, the acquisition of Shares through open market purchases,
privately negotiated transactions, or through amending the terms and conditions
of the Offer, making another tender offer or exchange offer or otherwise, in
each case upon such terms and at such prices as the Purchaser and the Parent
shall determine, which may be more or less than the Offer Price. The Purchaser
also reserves the right to dispose of Shares, to change the Offer Price, and to
decrease the number of Shares sought to be purchased in the Offer.
Certain other conditions to the consummation of the Offer are described in
Section 14. THE PURCHASER EXPRESSLY RESERVES THE RIGHT, IN ITS SOLE DISCRETION,
TO WAIVE ANY ONE OR MORE OF THE CONDITIONS TO THE OFFER. See Sections 14 and 15.
THE OFFER IS NOT CONDITIONED ON THE PURCHASER OBTAINING FINANCING. See Section
10.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
3
<PAGE>
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for any and all Shares
which are validly tendered prior to the Expiration Date (as hereinafter defined)
and not properly withdrawn in accordance with Section 4. The term "Expiration
Date" means 5:00 p.m., New York City time, on Wednesday, June 16, 1999, unless
and until the Purchaser, in its sole discretion, shall have extended the period
of time during which the Offer is open, in which event the term "Expiration
Date" shall refer to the latest time and date at which the Offer, as so extended
by the Purchaser, shall expire.
Subject to the applicable regulations of the Securities and Exchange
Commission (the "SEC"), the Purchaser also expressly reserves the right, in its
sole discretion, at any time or from time to time, (i) subject to the conditions
of the Offer set forth in Section 14, to decline to purchase any of the Shares
tendered in the Offer and terminate the Offer, and return all tendered Shares to
the tendering stockholders, (ii) to waive or amend any or all conditions to the
Offer to the extent permitted by applicable law and, subject to complying with
applicable rules and regulations of the SEC, purchase any and all Shares validly
tendered, or (iii) to extend the Offer and, subject to the right of stockholders
to withdraw Shares until the Expiration Date, retain the Shares which have been
tendered during the period or periods for which the Offer is extended.
The Purchaser expressly reserves the right, in its sole discretion, at any
time and from time to time, to extend for any reason the period of time during
which the Offer is open in accordance with the applicable regulations of the
SEC, including the occurrence of any of the conditions specified in the
Introduction and Section 14, by giving oral or written notice of such extension
to the Depositary. During any such extension, all Shares previously tendered and
not properly withdrawn will remain subject to the Offer, subject to the rights
of a tendering stockholder to withdraw Shares in accordance with the procedures
set forth in Section 4.
Subject to the applicable regulations of the SEC, the Purchaser also
expressly reserves the right, in its sole discretion, at any time and from time
to time, (i) to delay acceptance for payment of, or, regardless of whether such
Shares were theretofore accepted for payment, payment for, any Shares in order
to comply in whole or in part with any applicable law and (ii) to waive any
condition or otherwise amend the Offer in any respect, by giving oral or written
notice of such delay, waiver or amendment to the Depositary and by making a
public announcement thereof.
The Purchaser acknowledges that (i) Rule 14e-1(c) under the Exchange Act
requires the Purchaser to pay the consideration offered or return the Shares
tendered promptly after the expiration, termination or withdrawal of the Offer,
and (ii) the Purchaser may not delay acceptance for payment of, or payment for
(except as provided in clause (i) of the first sentence of the third preceding
paragraph), any Shares upon the occurrence of any of the conditions specified in
Section 14 without extending the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, with such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-1 under the Exchange Act, which require that material changes be
promptly disseminated to stockholders in a manner reasonably designed to inform
them of such changes) and without limiting the manner in which the Purchaser may
choose to make any public announcement, the Purchaser shall have no obligation
to publish, advertise or otherwise communicate any such public announcement
other than by issuing a press release to the Dow Jones News Service.
4
<PAGE>
If the Purchaser makes a material change in the terms of the Offer or
information concerning the Offer, or if it waives a material condition of the
Offer, the Purchaser will disseminate additional tender offer materials and
extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1
under the Exchange Act. The minimum period during which the Offer must remain
open following material changes in the terms of the Offer or information
concerning the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the changed terms or information. The SEC has taken the
position that an offer should generally remain open for a minimum of five
business days from the date a material change is first published, sent or given
to stockholders. With respect to a change in price or a change in percentage of
securities sought, a minimum ten business day period is required to allow for
adequate dissemination to stockholders and investor response. As used in this
Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1 under
the Exchange Act. Accordingly, if, prior to the Expiration Date, the Purchaser
increases or decreases the consideration offered pursuant to the Offer, and if
the Offer is scheduled to expire at any time earlier than the period ending on
the tenth business day from the date that notice of such increase or decrease is
first published, sent or given to holders of Shares, the Offer will be extended
at least until the expiration of such ten business day period.
A request is being made to the Company pursuant to Rule 14d-5 of the
Exchange Act for the use of the Company's stockholder lists and security
position listings for the purpose of disseminating the Offer to stockholders.
Upon compliance by the Company with this request, this Offer to Purchase, the
Letter of Transmittal, and all other relevant materials will be mailed to record
holders of Shares and will be furnished to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholders lists, or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares following receipt of their lists or
listings from the Company or by the Company, if it so elects.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will purchase, by accepting for payment, and will pay
for any and all Shares validly tendered prior to the Expiration Date (and not
properly withdrawn in accordance with Section 4) promptly after the later to
occur of (i) the Expiration Date and (ii) the satisfaction or waiver of the
conditions set forth in the Introduction and Section 14. The Purchaser expressly
reserves the right, in its discretion, to delay acceptance for payment of or,
subject to applicable rules of the SEC, payment for Shares in order to comply in
whole or in part with any applicable law. See Section 15. For a description of
the Purchaser's right to terminate the Offer and not accept for payment or pay
for Shares or to delay acceptance for payment of Shares. See Section 14.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) the certificates
evidencing such Shares (the "Share Certificates") or timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Shares, if such
procedure is available, into the Depositary's account at The Depository Trust
Company (the "Book-Entry Transfer Facility") pursuant to the procedures set
forth in Section 3, (ii) the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, or, in the case of a book-entry transfer,
an Agent's Message (as defined below), and (iii) any other documents required by
the Letter of Transmittal. See Section 3.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
5
<PAGE>
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn if, as and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance of such Shares for payment. Payment for
Shares accepted pursuant to the Offer will be made by deposit of the purchase
price therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payments from the Purchaser and
transmitting payments to such tendering stockholders. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE OFFER PRICE BY THE PURCHASER, REGARDLESS OF ANY
DELAY IN MAKING SUCH PAYMENT. Upon the deposit of funds with the Depositary for
the purpose of making payments to tendering stockholders, the Purchaser's
obligation to make such payment shall be satisfied and tendering stockholders
must thereafter look solely to the Depositary for payment of amounts owed to
them by reason of the acceptance for payment of Shares pursuant to the Offer.
The Purchaser will pay any stock transfer taxes incident to the transfer to it
of validly tendered Shares, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, as well as any charges and expenses of the Depositary and
the Information Agent.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing Shares
not purchased will be returned without expense to the tendering stockholder (or,
in the case of Shares tendered by book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedure set forth
in Section 3, such Shares will be credited to an account maintained at the
Book-Entry Transfer Facility) as promptly as practicable following the
expiration or termination of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
to be paid per Share pursuant to the Offer, the Purchaser will pay such
increased consideration for all such Shares purchased pursuant to the Offer,
whether or not such Shares were tendered prior to such increase in
consideration.
The Purchaser reserves the right to transfer or assign, in whole at any
time, or in part from time to time, to the Parent or one or more direct or
indirect wholly-owned subsidiaries of the Parent, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer; provided, that any
such transfer or assignment will not relieve the Purchaser of its obligations
under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
VALID TENDER OF SHARES. In order for Shares to be validly tendered pursuant
to the Offer, either (a) (i) the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (in the case of any book-entry transfer), and any other
required documents, must be received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date and (ii) the Share Certificates evidencing tendered Shares must be received
by the Depositary at one of such addresses or Shares must be tendered pursuant
to the procedure for book-entry transfer described below and the Book-Entry
Confirmation must be received by the Depositary, in each case prior to the
Expiration Date, or (b) the tendering stockholder must comply with the
guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND DELIVERY WILL BE DEEMED
MADE ONLY WHEN ITEMS ARE ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
6
<PAGE>
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Shares may be effected through book-entry transfer at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees or an Agent's Message,
and any other required documents must, in any case, be transmitted to and
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the Expiration Date or the tendering
stockholder must comply with the guaranteed delivery procedures described below.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH ITS
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEE. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the Securities
Transfer Agents Medallion Program (each, an "Eligible Institution"), unless the
Shares tendered thereby are tendered (i) by a registered holder of Shares who
has not completed either the box entitled "Special Delivery Instructions" or the
box entitled "Special Payment Instructions' on the Letter of Transmittal or (ii)
for the account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or Shares not
accepted for payment or not tendered are to be returned, to a person other than
the registered holder(s), then the Share Certificate must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Share Certificate, with the
signature(s) on such Share Certificate or stock powers guaranteed as described
above. See Instructions 1 and 5 of the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all the
following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Purchaser herewith, is received by the
Depositary as provided below prior to the Expiration Date; and
(iii) the Share Certificates for all tendered Shares, in proper form for
transfer, or a Book-Entry Confirmation, together with a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof) with
any required signature guarantee (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by such Letter of Transmittal,
are received by the Depositary within three NASDAQ Stock Market trading days
after the date of execution of the Notice of Guaranteed Delivery.
Any Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED, UNLESS A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED
FACSIMILE), OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY TRANSFER, IS
RECEIVED BY THE DEPOSITARY.
7
<PAGE>
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will, in all cases, be made only after timely receipt by
the Depositary of (i) the Share Certificates evidencing such Shares, or a
Book-Entry Confirmation of the delivery of such Shares, (ii) a properly
completed and duly executed Letter of Transmittal (or manually signed facsimile
thereof) and (iii) any other documents required by the Letter of Transmittal.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser in its sole discretion, which determination will be
final and binding on all parties. The Purchaser reserves the absolute right, in
its sole discretion, to reject any or all tenders of Shares determined by it not
to be in proper form or if the acceptance for payment of, or payment for, such
Shares may, in the opinion of the Purchaser's counsel, be unlawful. The
Purchaser also reserves the absolute right, in its sole discretion, to waive any
of the conditions of the Offer or any defect or irregularity in any tender with
respect to Shares of any particular stockholder, whether or not similar defects
or irregularities are waived in the case of other stockholders. In such event
the Purchaser will, if required, extend the Offer in accordance with the
applicable regulations of the SEC. No tender of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. No tender of Shares will be deemed to have been validly made until
all defects and irregularities have been cured or waived by the Purchaser. None
of the Parent, the Purchaser, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal as set forth
above (including delivery through an Agent's Message), a tendering stockholder
irrevocably appoints designees of the Purchaser as such stockholder's proxies,
each with full power of substitution, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by the Purchaser (and any and all noncash dividends, distributions,
rights, other Shares, or other securities issued or issuable in respect of such
Shares). All such proxies shall be considered coupled with an interest in the
tendered Shares. This appointment will be effective if, when and only to the
extent that the Purchaser accepts such Shares for payment pursuant to the Offer.
Upon such acceptance for payment, all prior proxies given by such stockholder
with respect to such Shares and other securities will, without further action,
be revoked, and no subsequent proxies may be given. The designees of the
Purchaser will, with respect to the Shares and other securities for which the
appointment is effective, be empowered to exercise all voting and other rights
of such stockholder as they in their sole discretion may deem proper at any
annual, special, adjourned or postponed meeting of the Company's stockholders,
by written consent or otherwise, and the Purchaser reserves the right to require
that, in order for Shares or other securities to be deemed validly tendered, the
Purchaser must be able to exercise full voting rights with respect to such
Shares immediately upon the Purchaser's acceptance for payment of such Shares.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING WITH RESPECT TO PAYMENT TO CERTAIN STOCKHOLDERS OF THE PURCHASE
PRICE FOR SHARES PURCHASED PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST
PROVIDE THE DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION
NUMBER AND CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME
TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF
TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES WITH RESPECT TO A STOCKHOLDER, THE
DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH STOCKHOLDER.
SEE INSTRUCTION 10 OF THE LETTER OF TRANSMITTAL.
8
<PAGE>
The Purchaser's acceptance for payment of Shares tendered pursuant to the
Offer will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment pursuant to the Offer, may also be withdrawn at any time
after July 16, 1999.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of Shares or is unable to accept Shares for payment pursuant to the Offer for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
the Depositary may, nevertheless, on behalf of the Purchaser retain tendered
Shares, and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described in this Section 4.
Any such delay will be by an extension of the Offer to the extent required by
law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Share Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such Share Certificates, the serial numbers shown on such Share
Certificates must be submitted to the Depositary and the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution, unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer as set
forth in Section 3, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares, in which case a notice of withdrawal will be effective if
delivered to the Depositary by any method of delivery described in the first
sentence of this paragraph. Withdrawals of Shares may not be rescinded. Any
Shares properly withdrawn will be deemed not validly tendered for purposes of
the Offer, but may be re-tendered at any subsequent time prior to the Expiration
Date by following any of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding. None of the Parent,
the Purchaser, the Dealer Manager, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered at any time prior to the Expiration Date by following the procedures
described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
GENERAL. The following is a summary of certain material United States
federal income tax consequences to Company stockholders of the sale of their
Shares to the Purchaser. However, the discussion does not purport to be a
complete analysis or listing of all of the tax considerations that might be
relevant to any particular Company stockholder in making a decision to tender or
not to tender Shares. The discussion does not deal with the tax consequences of
a sale of Shares to persons who are subject to special rules such as, for
example, financial institutions, dealers in securities, persons who hold Shares
as part of a
9
<PAGE>
straddle or conversion transaction, regulated investment companies, insurance
companies, tax-exempt organizations, and foreign persons. The discussion also
does not address the tax consequences of a sale of Shares to any stockholder of
the Company who does not hold that stock as a capital asset or who acquires the
stock as compensation. Moreover, the application to a sale of Shares of any
applicable state, local, or foreign tax laws, or any estate or gift tax laws, is
not discussed.
This discussion is based on the Internal Revenue Code of 1986 (the "Code"),
its legislative history, applicable final, temporary, and proposed Treasury
Regulations, judicial authority, and administrative rulings and practice, all as
currently existing and in effect. There can be no assurance that the Internal
Revenue Service (the "IRS") and the courts will not take a contrary view with
respect to these tax consequences, and no ruling from the IRS respecting these
tax consequences has been or will be sought. Legislative, judicial, or
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conclusions set forth herein. Any such changes or
interpretations may be retroactive and could affect (possibly adversely) the tax
consequences of a sale of Shares to stockholders of the Company.
SALE OF SHARES. The receipt of cash for Shares pursuant to the Offer or the
Proposed Merger will be a taxable transaction for federal income tax purposes.
Generally, for federal income tax purposes, a tendering stockholder will
recognize capital gain or loss equal to the difference, if any, between the
amount of cash received by the stockholder pursuant to the Offer and the
aggregate tax basis in the Shares tendered by the stockholder and purchased
pursuant to the Offer. Gain or loss will be computed separately for each block
of Shares (I.E., each group of Shares that was acquired at the same time and
price) tendered and purchased pursuant to the Offer.
For federal income tax purposes net capital gain (I.E., generally, capital
gain in excess of capital loss) recognized by an individual upon the sale or
exchange of a capital asset that has been held for more than 12 months will
generally be subject to tax at a rate not to exceed 20 percent of the net
capital gain, and net capital gain recognized from the sale or exchange of a
capital asset that has been held for 12 months or less will continue to be
subject to tax at the ordinary income tax rates applicable to individuals.
Ordinary income recognized by an individual (including dividends and short-term
capital gains) is subject to tax at a maximum rate of 39.6 percent of the
income. For federal income tax purposes net capital gain recognized by a
corporate taxpayer will be subject to tax at the ordinary income tax rates
applicable to corporations. The maximum federal tax rate applicable to all
capital gains and ordinary income recognized by a corporation is 35 percent of
the income.
WITHHOLDING. Unless a stockholder complies with certain reporting and/or
certification procedures, or is an exempt recipient under applicable provisions
of the Code and tax regulations, such stockholder may be subject to "backup"
withholding of 31 percent with respect to any payments received pursuant to the
Offer. Stockholders should contact their brokers to ensure compliance with such
procedures. Foreign stockholders should consult with their tax advisors
regarding United States withholding taxes in general. Stockholders tendering
their Shares in the Offer generally may prevent backup withholding by completing
the Substitute Form W-9 included in the Letter of Transmittal.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX
ADVICE. ACCORDINGLY, EACH COMPANY STOCKHOLDER WHO MAY WISH TO TENDER SHARES
SHOULD CONSULT WITH SUCH STOCKHOLDER'S TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO SUCH STOCKHOLDER OF THE SALE OF SHARES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR NON-UNITED STATES LAWS AND ANY
PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS.
10
<PAGE>
6. PRICE RANGE OF SHARES; DIVIDENDS.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1998 (the "Company Form 10-K") and other publicly-available
information, the Shares are listed and principally traded on the NASDAQ National
Market System ("NASDAQ NMS") under the symbol "RMCF". The following table sets
forth, for the quarters indicated, the high and low sales prices per Share on
the NASDAQ NMS as reported in the Company Form 10-K for periods in 1997 and 1998
and as reported by published financial sources with respect to periods in 1998
and 1999:
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
Fiscal Year Ended February 28, 1998:
Quarter ended May 31, 1997................................................................ $ 5 1/8 $ 2 3/4
Quarter ended August 31, 1997............................................................. 5 1/4 4
Quarter ended November 30, 1997........................................................... 7 1/8 4 1/4
Quarter ended February 28, 1998........................................................... 6.596 4 1/2
Fiscal Year Ended February 28, 1999:
Quarter ended May 31, 1998................................................................ $ 7 3/4 4 3/4
Quarter ended August 31, 1998............................................................. 7 1/8 4 1/4
Quarter ended November 30, 1998........................................................... 6 1/2 4
Quarter ended February 28, 1999........................................................... 6.594 4 1/2
Fiscal Year Ended February 28, 2000:
Quarter ended May 31, 1999 (through May 7)................................................ $ 4 3/4 $ 3 1/8
</TABLE>
On May 7, 1999, the last trading day prior to the date of the Offer, the
reported closing sales price of the Shares on the NASDAQ NMS was $3.50 per
Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
SHARES.
According to the Company Form 10-K, the Company has not declared or paid
dividends on the Shares since it became a publicly-owned Company.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK EXCHANGE LISTING
AND EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
STOCK MARKET LISTINGS. The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and may reduce
the number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares held by stockholders other than the
Purchaser. The Purchaser cannot predict whether the reduction in the number of
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for or marketability of the Shares or whether it
would cause future market prices to be greater or less than the Offer Price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NASDAQ NMS for continued
listing and may, therefore, be delisted. According to the NASDAQ NMS's published
guidelines, the NASDAQ NMS could consider delisting the Shares if, among other
things, the number of publicly held Shares (excluding Shares held by officers,
directors, their immediate families and other concentrated holdings of 10% or
more) were less than 500,000, there were less than 300 public holders of at
least 100 Shares, or the aggregate market value of the publicly held Shares was
less than $1 million. If, as a result of the purchase of Shares pursuant to the
Offer, the Shares no longer meet the requirements of the NASDAQ NMS for
continued listing and the listing of Shares thereon is discontinued, the market
for the Shares could be adversely affected.
If the NASDAQ NMS were to delist the Shares, it is possible that the Shares
would trade on another securities exchange or in the over-the-counter market and
that price quotations for the Shares would be
11
<PAGE>
reported by such exchange or on the Bulletin Board, the "pink sheets" or other
sources. The extent of the public market for the Shares and the availability of
such quotations would, however, depend upon such factors as the number of
holders and/or the aggregate market value of the publicly held Shares at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. The purchase of Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Registration
of the Shares may be terminated upon application of the Company to the SEC if
the Shares are not listed on a national securities exchange and there are fewer
than 300 record holders. The termination of the registration of the Shares under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of the Shares and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement in
connection with stockholders' meetings, and the requirements of Rule 13e-3 under
the Exchange Act with respect to "going private" transactions, no longer
applicable to the Shares. Furthermore, "affiliates" of the Company and persons
holding "restricted securities" of the Company could be deprived of the ability
to dispose of the securities pursuant to Rule 144 or 144A under the Securities
Act of 1933, as amended. It is the current intention of the Purchaser to seek to
cause the Company to terminate the registration of the Shares as soon after the
consummation of the Offer or the Proposed Merger as the requirements for
termination of registration are met.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of the Shares for the purpose of buying,
carrying or trading in securities ("purpose loans"). Depending upon factors
similar to those described above with respect to listing and market quotations,
the Shares might no longer constitute "margin securities" for the purposes of
the Federal Reserve Board's margin regulations and, therefore, could no longer
be used as collateral for purpose loans made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been taken from or based upon publicly
available documents and records on file with the SEC and other public sources.
None of the Parent, the Purchaser, the Dealer Manager, the Depositary or the
Information Agent assumes any responsibility for the accuracy or completeness of
the information concerning the Company contained in such documents and records
or for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to the Parent or the Purchaser.
The Company is a Colorado corporation whose principal executive offices are
located at 265 Turner Drive, Durango, Colorado 81301. The Company was
incorporated in 1982.
The Company is a manufacturer, international franchisor and retail operator
of an extensive line of gourmet chocolates and other confectionery items. The
Company sells its candies in more than 220 company-owned and franchised stores
as well as through a variety of third party retail and non-retail programs,
including national and international retail, fundraising, corporate sales and
internet programs.
On March 12, 1999 the Company issued the following press release:
"Rocky Mountain Chocolate Factory, Inc. (Nasdaq:RMCF) today
announced that earnings per share for the fiscal year ended February
28, 1999 will be significantly lower than previously anticipated.
Factors contributing to less than expected fiscal 1999 earnings per
share include: (1) Less than anticipated sales to distribution
channels outside the Company's system of retail
12
<PAGE>
stores; (2) Incremental costs associated with the start-up (due to
labor shortages and facility space constraints) and ultimate closure
(due to less than anticipated demand) of a remote packaging
facility; (3) Production inefficiencies caused by facility space
constraints and the lack of a sufficient seasonal workforce; (4)
Write-down provisions for spoiled, excess and obsolete inventory
resulting from product over-production; (5) Higher than expected
third party shipping costs; and (6) Provisions for returns and
allowances relating to products sold to outside distribution
channels.
The Company is in the process of evaluating and implementing a
restructuring program to address these issues. The restructuring
plan includes: re-engineering certain of the Company's manufacturing
processes, implementation of a cost structure reduction and
containment program, securing a competitive third party shipping
agreement, and creating new and distinct packaging for outside
channels. The Company believes its restructuring efforts will
improve operating margins and restore the Company to an acceptable
level of profitability.
In addition to the Company's internal restructuring plans, the
Company intends to continue to selectively pursue potential
strategic relationships.
This press release contains certain forward-looking statements
regarding the Company's expected performance for the current and
future periods; actual results for such periods may materially
differ. Such forward-looking statements involve risks and
uncertainties that may cause such expectations not to be realized,
including changing market conditions in the overall economy and
retail industry, changes in consumer demand or competitive
conditions, the success of the Company's strategy of expanding into
new, previously untested distribution channels and other factors
detailed from time to time in the Company's annual and other reports
filed with the Securities and Exchange Commission.
Rocky Mountain Chocolate Factory, Inc. is a manufacturer of an
extensive line of premium chocolates and other confectionery
products, a retail operator and an international franchiser."
FINANCIAL INFORMATION ON THE COMPANY. The following table sets forth
certain summary consolidated financial information with respect to the Company
excerpted or derived from the audited financial statements contained in the
Company Form 10-K and the unaudited financial information of the Company for the
nine months ended November 30, 1997 and 1998 contained in the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1998. More
comprehensive financial information is included in such reports and other
documents filed by the Company with the SEC, and the following summary is
qualified in its entirety by reference to such documents (which may be inspected
and obtained as described below), including the financial statements and related
notes contained therein. Neither the Parent, the Purchaser, the Dealer Manager,
the Depositary, nor the Information Agent assumes any responsibility for the
accuracy of the financial information set forth below.
13
<PAGE>
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED FEBRUARY 28, NOVEMBER 30,
------------------------------- --------------------
INCOME STATEMENT DATA 1998 1997 1996 1998 1997
- ----------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Total revenues............................................. $ 23,764 $ 22,281 $ 18,552 $ 19,503 $ 17,426
Net income (loss).......................................... 240 (1,366) 1,208 1,191 735
Net income (loss) per common stock......................... 0.08 (0.47) 0.43 0.44 0.25
AT FEBRUARY 28,
BALANCE SHEET 1998 1997 AT NOVEMBER 30, 1998
- ----------------------------------------------------------- --------- --------- -------------------------------
Total assets............................................... $ 19,868 $ 18,666 $ 21,799
Long term debt............................................. 5,993 5,737 5,523
Stockholders' equity....................................... 10,019 9,779 9,269
</TABLE>
The Company is subject to the information and reporting requirements of the
Exchange Act and is required to file reports and other information with the SEC
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Shares, any material interests of such persons in transactions with the Company
and other matters is required to be disclosed in proxy statements distributed to
the Company's stockholders and filed with the SEC. These reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the SEC located in Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and also should be available for
inspection and copying at prescribed rates at the following regional offices of
the SEC: Seven World Trade Center, New York, New York 10048; and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material may
also be obtained by mail, upon payment of the SEC's customary fees, from the
SEC's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
SEC also maintains an Internet web site at http://www.sec.gov that contains
reports, proxy statements and other information. The Shares are listed on the
NASDAQ NMS, and reports, proxy statements and other information concerning the
Company should also be available for inspection at the offices of the NASDAQ
NMS, 1735 K Street, N.W., Washington, D.C. 20006.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT.
THE PURCHASER. The Purchaser is a Delaware corporation which was organized
in 1999. The principal offices of the Purchaser are located at 1000 Walnut St.,
Suite 900, Kansas City, Missouri 64106. Effective August 1, 1999, the
Purchaser's principal executive offices will be located at 4900 Oak Street,
Kansas City, Missouri 64112. The Purchaser is a wholly-owned subsidiary of the
Parent. Until immediately prior to the time that the Purchaser will purchase
Shares pursuant to the Offer, it is not expected that the Purchaser will have
any significant assets or liabilities or engage in activities other than the
ownership of Shares and those activities incident to the transactions
contemplated by the Offer.
THE PARENT. The Parent is a Missouri corporation with its principal
executive offices located at 1000 Walnut St., Suite 900, Kansas City, Missouri
64106. Effective August 1, 1999, the Parent's principal executive offices will
be located at 4900 Oak Street, Kansas City, Missouri 64112. The Parent markets
and sells a variety of different chocolate candy and confectionery products
under the "Whitman's" brand name, including the famous "Whitman's Sampler" boxed
chocolates. The Parent is affiliated with Russell Stover Candies, Inc.
("Affiliate") because of certain common shareholders, officers and directors.
Affiliate, which is the third largest manufacturer of chocolate candy and
confectionery products in the United States, operates seven major manufacturing
plants across the country. The Parent purchases its candy and
14
<PAGE>
confectionery products from Affiliate pursuant to an arms' length supply
contract. The Parent and Affiliate had combined sales of more than $500 million
in 1998, primarily through sales to retail accounts. The Parent's sales were
approximately $130 million.
FINANCIAL INFORMATION. As a private company, the Parent is not subject to
the information reporting requirements of the Exchange Act, and, accordingly,
does not file reports or other information with the SEC relating to its
business, financial condition and other matters. As a result, such information
has not generally been available to the public.
Set forth below is certain selected historical consolidated financial
information relating to the Parent and its subsidiaries for the fiscal years
ended December 1, 1998, 1997 and 1996. Such information is provided for
supplemental information purposes only and is neither intended nor required to
comply with the requirements of the Exchange Act. Because the only consideration
in the Offer is cash, and in view of the amount of consideration payable in
relation to the financial capability of the Parent and its affiliates and the
irrevocable letter of credit obtained by the Parent described in Section 10, the
Purchaser believes that additional financial information regarding the Parent
and its affiliates is not material to a decision by a holder of Shares whether
to sell, tender or hold Shares pursuant to the Offer.
15
<PAGE>
WHITMAN'S CANDIES, INC. AND SUBSIDIARIES
SELECTED, UNAUDITED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
12/31/98 12/31/97 12/31/96
---------- ---------- ----------
<S> <C> <C> <C>
Current assets............................................................... $ 44,036 $ 35,187 $ 31,992
Other assets................................................................. 5,323 6,363 6,878
---------- ---------- ----------
Total assets............................................................... 49,359 41,550 38,870
---------- ---------- ----------
---------- ---------- ----------
Current liabilities.......................................................... $ 35,980 $ 29,333 $ 23,613
Minority interest in consolidated subsidiary................................. 18 80 78
Stockholders' equity......................................................... 13,361 12,137 15,179
---------- ---------- ----------
49,359 41,550 38,870
---------- ---------- ----------
---------- ---------- ----------
1998 1997 1996
---------- ---------- ----------
Net sales.................................................................... $ 129,771 $ 124,507 $ 86,338
Cost of goods sold........................................................... 85,328 76,315 56,973
---------- ---------- ----------
Gross profit............................................................... 44,443 48,192 29,365
Selling, general and administrative expenses................................. 39,402 35,218 24,932
---------- ---------- ----------
Operating profit........................................................... 5,041 12,974 4,433
Interest income.............................................................. 1,254 247 440
Minority interest in loss of consolidated subsidiary......................... 33 25 10
Other........................................................................ 4,150 (1,205) 69
---------- ---------- ----------
Net income (loss).......................................................... 10,478 12,041 4,952
---------- ---------- ----------
---------- ---------- ----------
1998 1997 1996
---------- ---------- ----------
Beginning stockholders' equity............................................... $ 12,137 $ 15,179 $ 19,949
Paid in capital.............................................................. -- -- --
Net income (loss)............................................................ 10,478 12,041 4,952
Distributions................................................................ (8,861) (15,083) (9,722)
Cumulative foreign currency translation...................................... (393) -- --
---------- ---------- ----------
Ending stockholders' equity................................................ 13,361 12,137 15,179
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of the Parent and the Purchaser are set forth in Schedule I hereto.
OWNERSHIP OF SHARES. The Parent does not currently beneficially own any
Shares.
Neither the Parent nor the Purchaser, nor, to the best knowledge of the
Parent or the Purchaser, any of the persons listed in Schedule I hereto, or any
associate or majority-owned subsidiary of such persons, beneficially owns any
equity security of the Company and neither the Parent nor the Purchaser, nor, to
the best knowledge of the Parent or the Purchaser, any of the other persons
referred to above, or any of the respective directors, executive officers or
subsidiaries of any of the foregoing, has effected any transaction in any equity
security of the Company during the past 60 days.
16
<PAGE>
Except as set forth in this Offer to Purchase, neither the Parent nor the
Purchaser, nor, to the best knowledge of the Parent or the Purchaser, any of the
persons listed in Schedule I hereto has any contract, arrangement, understanding
or relationship with any other person with respect to any securities of the
Company, including, without limitation, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls, guaranties
of loans, guaranties against loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, neither the Parent nor the
Purchaser, nor, to the best knowledge of the Parent or the Purchaser, any of the
persons listed in Schedule I hereto has had any transactions with the Company,
or any of its executive officers, directors or affiliates that would require
reporting under the rules of the SEC.
CIVIL PROCEEDINGS. During the past five years neither the Parent nor the
Purchaser, nor, to the best knowledge of the Parent or the Purchaser, any of the
persons listed in Schedule I hereto has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws, or finding any violation of such laws.
10. SOURCE AND AMOUNT OF FUNDS.
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended November 30, 1998, as of January 5, 1999, there were 2,599,599 Shares
issued and outstanding. According to the Company's Annual Report on Form 10-K
for the year ended February 28, 1998, as of February 28, 1998, 151,000 Shares
were issuable under then outstanding and presently exercisable options. The
Parent currently does not beneficially own any Shares. Based on the foregoing
and assuming that no options were granted after February 28, 1998, and that no
options were exercised, expired or became exercisable from February 28, 1998
through the date hereof, there would be 2,750,599 Shares outstanding on a fully
diluted basis and the number of Shares subject to the Offer and the Proposed
Merger would be 2,750,599. The actual number of Shares subject to the Offer and
the Proposed Merger will depend upon the facts as they exist on the date of the
purchase or the Effective Date. Based on this information, Parent and Purchaser
currently believe that approximately 1,375,300 Shares must be tendered and not
withdrawn to satisfy the Minimum Tender Condition.
The Purchaser estimates that the total amount of funds required to purchase
all of the Shares pursuant to the Offer and to pay all related costs and
expenses will be approximately $16.5 million. The Purchaser plans to obtain such
funds through capital contributions or advances made by the Parent. The Parent
has approximately $5 million in cash on hand and has obtained an irrevocable
standby letter of credit from Commerce Bank, N.A. in the amount of $25 million
for a period of 12 months (the "Irrevocable Letter of Credit") to pay the
estimated funds necessary to consummate the Offer. The Purchaser may also
consider paying off some or all of the approximately $5.5 million of long-term
indebtedness of the Company (as of November 30, 1998). The amount, if any, to be
paid off will depend on a number of factors, including interest rates,
prepayment penalties (if any) and the ability to obtain necessary consents.
Accordingly, the exact amounts and timing of any payments of existing
indebtedness of the Company are subject to various factors and are not, at this
time, determinable.
The Irrevocable Letter of Credit is secured by the assets of the Parent and
by a pledge of publicly-traded bonds by certain shareholders of the Parent. The
Parent's cost of the Irrevocable Letter of Credit that it has obtained is
interest at the rate of one-quarter ( 1/4) of one percent per annum for the
period during which the Irrevocable Letter of Credit is outstanding; plus a
one-time fee of $18,000. The Irrevocable Letter of Credit may be drawn upon in
the event the Offer is consummated, the Proposed Merger is consummated or the
Parent decides to pay off some of the existing indebtedness of the Company.
17
<PAGE>
It is anticipated that the Parent may reimburse its shareholders for any of
their assets used to fund the Irrevocable Letter of Credit from funds generated
internally by Parent or through additional borrowings from public or private
sources (including Affiliate).
The foregoing description of the Irrevocable Letter of Credit is qualified
in its entirety by reference to the full text of such Irrevocable Letter of
Credit, a copy of which has been attached as an exhibit to the Schedule 14D-1
filed with the SEC in connection with the Offer.
THE OFFER IS NOT CONDITIONED UPON THE PURCHASER OBTAINING FINANCING.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In the ordinary course of the Parent's and Affiliate's long-term strategic
review process, both entities routinely analyze investments and potential
combinations with various companies. In furtherance of that objective in
October, 1998, Mr. Richard S. Masinton, Chief Administrative Officer of both the
Parent and Affiliate, contacted Mr. Jonathan Baum of George K. Baum & Co., Inc.
("GKB") to express an interest in acquiring an equity position in the Company
and to inquire whether GKB could represent Affiliate in approaching management
of the Company to discuss possible alternatives. However, Mr. Baum responded
that, coincidentally, GKB already had been contacted by the Company to assist
the Company in developing strategies to increase shareholder value and that Mr.
Duncan O'Brien of GKB would inform the Company's management of Affiliate's
expression of interest.
By December 1998, Mr. Masinton had not received any communication from GKB
or the Company. In mid-December 1998, Mr. Masinton called Mr. Franklin Crail,
Chief Executive Officer of the Company, to discuss the acquisition by Affiliate
of an equity interest in the Company, and to discuss strategic advantages that
could result from a combination. Mr. Masinton and Mr. Crail met on January 5,
1999 to discuss Affiliate's interest in the Company. Mr. Crail showed an
interest in seeking a strategic alliance or initiative to enhance shareholder
value.
On January 13, 1999, Mr. Masinton sent a letter to Mr. Crail outlining the
advantages that Affiliate could bring to the Company if Affiliate were to
acquire a strategic and financial interest in the Company. Mr. Masinton stated
in the letter that, because of Affiliate's size and resources, Affiliate could
improve the Company's production, operating and manufacturing efficiencies. Mr.
Masinton outlined what Affiliate believed would be the benefit of these improved
efficiencies. Those benefits, according to Mr. Masinton's letter, would include
potential improved franchise profitability, lower costs for raw materials and
more creative packaging. Although Mr. Masinton's letter referred to selling the
Company's products in distribution channels outside the Company's retail store
system, Affiliate and the Parent have subsequently determined that, if the
Purchaser acquires control of the Company, it intends to reassert the Company's
emphasis and focus on its retail operations. Mr. Masinton's letter referred in
general terms to Affiliate's desired stock ownership percentage and commensurate
representation on the Board of Directors, but did not specify a required
ownership percentage.
On January 20, 1999, Mr. Crail sent a letter to Mr. Masinton acknowledging
Affiliate's expression of interest in acquiring a strategic stake in the Company
and requesting that Affiliate execute a standstill and confidentiality agreement
in advance of further negotiations and sharing of information about the Company.
In early March 1999, Mr. Crail contacted Mr. Masinton, who informed Mr. Crail
that management of Affiliate did not believe that a standstill agreement was
appropriate.
On March 12, 1999, the Company issued a press release stating that "[i]n
addition to the Company's internal restructuring plans, the Company intends to
continue to selectively pursue potential strategic relationships." For the full
text of this press release, see Section 8.
In late March or early April 1999, Mr. O'Brien of GKB contacted Mr. Masinton
to inquire about Affiliate's interest in the Company. Mr. O'Brien told Mr.
Masinton that Mr. O'Brien did not call on behalf of the Company, but out of
personal curiosity. Mr. Masinton told Mr. O'Brien that management of Affiliate
had made the decision that if Affiliate were to acquire an equity interest in
the Company, it would want to acquire at least a majority of the Shares up to
and including all Shares. Several days later, Mr. Crail
18
<PAGE>
called Mr. Masinton. Mr. Masinton affirmed management's intent to invest in the
Company only if it could acquire at least a majority of the Shares.
Subsequently, managements of Affiliate and the Parent decided and agreed
that Parent, acting through its wholly-owned subsidiary, rather than Affiliate,
would seek to acquire Shares of the Company.
On May 5, 1999, Mr. Masinton called Mr. Crail to suggest a meeting in Denver
on May 7, 1999 to discuss Parent's interest in the Company.
On May 7, 1999, Messrs. Masinton and Crail met in Denver. Mr. Masinton
informed Mr. Crail that the Parent was prepared to make a tender offer for all
Shares. The price of a proposed offer was not discussed, but Mr. Masinton
referred generally to the premiums above market prices that are commonly paid in
the current tender offer market. Mr. Masinton requested that Mr. Crail express
his support for the tender offer to other members of the Board of Directors and
with the shareholders. Mr. Crail told Mr. Masinton he would contact his legal
counsel.
Following this meeting, David Casper of the Dealer Manager contacted certain
members of the Board of Directors of the Company to discuss the Parent's
interest in acquiring the Company.
On May 7, 1999, in separate phone calls, Bryan Merryman, an executive
officer of the Company, and legal counsel for the Company, called legal counsel
for the Parent to request a draft of a proposed Merger Agreement (without price
information) between the Parent, the Purchaser and the Company, which was
provided to them.
On May 8, 1999, Mr. Casper of the Dealer Manager was called by Mr. O'Brien
of GKB. Mr. O'Brien informed Mr. Casper that the Board of Directors of the
Company had met that morning and that GKB had been engaged by the Company. Mr.
Casper informed Mr. O'Brien that the Parent was very interested in acquiring all
of the Shares and hoped that Mr. Crail and the Board would support their offer.
Mr. Casper further indicated that the Parent's offer price would be based on an
assumption that the current state of the business had not significantly
deteriorated and would represent a substantial premium to the market's current
view of the Company. Mr. O'Brien suggested that he might call Mr. Casper on
Sunday, May 9.
On May 10, 1998, the Parent issued the following press release:
WHITMAN'S CANDIES SUBSIDIARY COMMENCES $5.75 PER SHARE TENDER OFFER FOR
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
"Kansas City, MO (May 10, 1999). Whitman's Candies, Inc. today
announced that its wholly-owned subsidiary, WC-RMA Corp., has commenced
a cash tender offer for any and all outstanding shares of Rocky Mountain
Chocolate Factory, Inc. (NASDAQ: RMCF) at $5.75 per share. Whitman's,
based in Kansas City, Missouri, is an affiliate of Russell Stover
Candies, Inc., the country's largest producer of boxed chocolates.
Whitman's markets and sells a variety of candy and confectionery
products, including the famous "Whitman's Sampler" boxed chocolates,
throughout the world.
WC-RMA Corp.'s offer provides Rocky Mountain's shareholders a 64%
premium over Rocky Mountain's closing price on Friday, May 7, 1999 and a
73.1% premium over Rocky Mountain's 30-day average closing price. The
offer will expire at 5 p.m. EDT on Wednesday, June 16, 1999, unless
extended.
In a recent press release, Rocky Mountain announced that earnings
per share for the fiscal year ended February 28, 1999 will be
significantly lower than previously anticipated. In that press release,
Rocky Mountain cited a number of factors as contributing to its lower
earnings, including certain failures relating to sales to distribution
channels outside Rocky Mountain's system of retail stores, incremental
costs associated with the start-up and closure of a remote packaging
facility, production inefficiencies caused by facility space constraints
and the lack of a sufficient seasonal work force, product overproduction
problems and higher than expected third-party shipping costs.
19
<PAGE>
Richard S. Masinton, Chief Administrative Officer of Whitman's,
stated, "Notwithstanding the problems Rocky Mountain Chocolate Factory
has encountered, we continue to admire the quality of Rocky Mountain's
products and are impressed by their company-owned and franchised stores.
Rocky Mountain should take great pride in their accomplishments to
date."
Thomas S. Ward, Co-President of Whitman's, said that one of
Whitman's priorities would be to discontinue the sales of Rocky Mountain
products in distribution channels outside Rocky Mountain's system of
retail stores. "The strength of Rocky Mountain lies in the strength of
its franchisees and their retail stores. We believe that the production,
operating and manufacturing efficiencies that Whitman's can provide,
together with the strong brand awareness and quality reputation of Rocky
Mountain will create a strong base of support for the franchisee
network. We would plan to work with the franchisees to continue to
expand sales and build on the Rocky Mountain brand name."
Whitman's said that the offer is conditioned upon, among other
things, the tender to the Company of a majority of Rocky Mountain shares
on a fully-diluted basis, the expiration or termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
and Rocky Mountain's not taking any defensive corporate action in
opposition to Whitman's offer.
Nesbitt Burns Securities Inc. is serving as financial advisor to the
Company. D.F. King & Co., Inc. is serving as information agent for the
offer.
This press release is neither an offer to purchase nor a
solicitation of an offer to sell any shares of Rocky Mountain. The offer
is made solely by WC-RMA Corp.'s Offer to Purchase dated May 10, 1999
and the related letter of transmittal."
Depending on the Company's response to this Offer, the Parent may take such
further actions as it deems appropriate to achieve its objective of acquiring
control of the Company, including conducting a proxy contest at the Company
Annual Meeting or a Company Special Meeting. See also "Introduction" for a
description of various actions which the Parent and the Purchaser may take in
the event that the Company takes any of the actions described in the Defensive
Action Condition.
Other than as set forth above, there have not been any contacts,
negotiations or transactions between the Parent or the Purchaser, or involving
their respective subsidiaries or, to the best knowledge of the Parent or the
Purchaser, any of the persons listed in Schedule I hereto, on the one hand, and
the Company or its executive officers, directors or affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors or a sale or other transfer of
a material amount of assets.
12. PURPOSE OF THE OFFER; PROPOSED MERGER; PLANS FOR THE COMPANY.
PURPOSE OF THE OFFER AND THE PROPOSED MERGER. The purpose of the Offer is
for the Parent, through the Purchaser, to acquire control of, and the entire
equity interest in, the Company. The Parent and the Purchaser currently intend,
as soon as practicable following completion of the Offer, to seek to consummate
the Proposed Merger. The Parent and the Purchaser intend that in the Proposed
Merger, each then outstanding Share (other than Shares owned by the Parent, the
Purchaser or any of their wholly-owned subsidiaries and Shares held in the
treasury of the Company) would be converted into the right to receive $5.75 in
cash, without interest.
The SEC has adopted Rule 13e-3 under the Exchange Act, which is applicable
to certain "going private" transactions and which may under certain
circumstances be applicable to a business combination following the purchase of
Shares pursuant to the Offer in which the Purchaser seeks to acquire the
remaining Shares not held by it. The Purchaser believes, however, that if such a
business combination is consummated within one year of its purchase of Shares
pursuant to the Offer, Rule 13e-3 will not be applicable to it. The Purchaser
believes that if such a business combination is not consummated within one year
of its purchase of Shares pursuant to the Offer, Rule 13e-3 will be applicable
to it. Rule 13e-3
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requires, among other things, that certain financial information concerning the
Company and certain information relating to the fairness of the proposed
transaction and the consideration offered to minority stockholders in such
transaction be filed with the SEC and disclosed to stockholders prior to
consummation of the transaction.
Holders of Shares do not have appraisal rights as a result of the Offer.
However, holders of Shares will have certain rights pursuant to the provisions
of Article 113 of the BCA if the Proposed Merger is consummated, including the
right to dissent and demand appraisal of their Shares. Under Article 113,
dissenting stockholders who comply with the applicable statutory procedures and
cannot resolve their dissension with the Company regarding the fair value of
their Shares pursuant to Article 113, may be entitled to receive a judicial
appraisal of the fair value of their Shares and to receive payment of such fair
value in cash, together with a fair rate of interest, if any. Any such judicial
appraisal of the fair value of Shares could be based upon factors other than, or
in addition to, the price per Share to be paid in the Proposed Merger or the
market value of the Share. The value so determined could be more or less than
the price per Share paid in the Proposed Merger. The foregoing summary of
Article 113 does not purport to be complete and is qualified in its entirety by
reference to Article 113.
The Purchaser and the Parent reserve the right to purchase, following
consummation, termination or withdrawal of the Offer, additional Shares in the
open market, in privately negotiated transactions, in another tender offer or
exchange offer or otherwise. In addition, in the event that the Purchaser
decides not to propose the Proposed Merger, to propose a merger on terms other
than those described above, or to withdraw any merger previously proposed, the
Purchaser and the Parent will evaluate their other alternatives. These
alternatives could include purchasing Shares in the open market, in privately
negotiated transactions, in another tender offer or exchange offer or otherwise,
or taking no further action to acquire Shares. Any additional purchases of
Shares by the Purchaser or the Parent could be at a price greater or less than
the price to be paid for Shares in the Offer and could be for cash or other
consideration. Alternatively, the Purchaser and the Parent may sell or otherwise
dispose of any or all Shares acquired pursuant to the Offer or otherwise. Such
transactions may be effected on terms and at prices then determined by the
Purchaser and the Parent, which may vary from the price proposed to be paid for
Shares in the Offer.
In connection with the Offer and Proposed Merger, the Parent and the
Purchaser intend, if necessary, to nominate and solicit proxies for the election
of the Parent Nominees to the Company Board at the Company Annual Meeting or a
Company Special Meeting and to solicit proxies for certain other proposals. The
Parent expects that, if elected and subject to their fiduciary duties under
applicable law, the Parent Nominees would be proponents of action by the Company
Board to approve the Proposed Merger and take any other actions necessary to
permit the Offer and the Proposed Merger to be consummated. Such solicitation
will be made pursuant to separate proxy materials complying with the
requirements of Section 14(a) of the Exchange Act.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE COMPANY ANNUAL MEETING OR
ANY SPECIAL MEETING OF THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WHICH
THE PARENT AND/OR THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE
PROXY SOLICITATION MATERIALS COMPLYING WITH ALL APPLICABLE REQUIREMENTS OF
SECTION 14(A) OF THE EXCHANGE ACT.
PLANS FOR THE COMPANY. The Purchaser has made a preliminary review of, and
will continue to review, on the basis of available information, various possible
business strategies that it might consider if it acquires control of the
Company. If the Purchaser acquires control of the Company, the Purchaser intends
to conduct a detailed review of the Company and its assets, corporate structure,
dividend policy, capitalization, operations, properties, policies and personnel
and consider what, if any, additional changes or sale of assets would be
desirable in light of the circumstances which then exist. Other than as
generally described below, the Purchaser and the Parent have no present
intention to make any significant changes in the business strategies of the
Company, and they have not identified any specific assets, corporate
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structure, or other business strategy which warrants change, except that the
Purchaser and the Parent intend to (i) reassert the Company's emphasis and focus
on its retail operations by, among other things, improving and expanding
franchisee relationships and working with franchisees to achieve better
profitability and increased efficiency, (ii) increase the number of products
offered at retail and improve packaging for Company products by utilizing
Affiliate's substantial production capacity and packaging capabilities, and
(iii) increase the Company's production, operating and manufacturing
efficiencies. Decisions as to the retention or dismissal of the Company's
executive officers will be made by the Purchaser on an individual basis if and
when it gains control of the Company. Such decisions will be based upon factors
including, without limitation, merit, compatibility and functional
reorganization.
Except as otherwise described in this Offer to Purchase, neither the Parent
nor the Purchaser has any present plans or proposals that would result in an
extraordinary corporate transaction, such as a reorganization, liquidation,
relocation of operations, or sale or transfer of assets involving the Company,
or any material changes in the Company's corporate structure, business or
personnel.
13. DIVIDENDS AND DISTRIBUTIONS.
If, on or after the date of this Offer to Purchase, the Company should (i)
split, combine or otherwise change the Shares or its capitalization, (ii) issue
or sell any additional securities of the Company or otherwise cause an increase
in the number of outstanding securities of the Company or (iii) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares, then, without prejudice to the Purchaser's rights under
Sections 1 and 14, the Purchaser, in its sole discretion, may make such
adjustments as it deems appropriate in the purchase price and other terms of the
Offer, including, without limitation, the amount and type of securities offered
to be purchased.
If, on or after the date of this Offer to Purchase, the Company should
declare or pay any dividend on the Shares, or make any distribution (including,
without limitation, the issuance of additional Shares pursuant to a stock
dividend or stock split, the issuance of other securities or the issuance of
rights for the purchase of any securities) with respect to the Shares that is
payable or distributable to stockholders of record on a date prior to the
transfer to the name of the Purchaser or its nominee or transferee on the
Company's stock transfer records of the Shares purchased pursuant to the Offer,
then, without prejudice to the Purchaser's rights under Sections 1 and 14, (i)
the purchase price per Share payable by the Purchaser pursuant to the Offer will
be reduced by the amount of any such cash dividend or cash distribution, and
(ii) any such non-cash dividend, distribution or right to be received by the
tendering stockholders will be received and held by such tendering stockholders
for the account of the Purchaser and will be required to be promptly remitted
and transferred by each such tendering stockholder to the Depositary for the
account of the Purchaser, accompanied by appropriate documentation of transfer.
Pending such remittance and subject to applicable law, the Purchaser will be
entitled to all rights and privileges as owner of any such non-cash dividend,
distribution or right and may withhold the entire purchase price or deduct from
the purchase price the amount of value thereof, as determined by the Purchaser
in its sole discretion.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's right to extend and amend the Offer at any
time in its sole discretion, the Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate the Offer as to any Shares not then paid for, if in
the sole judgment of the Purchaser, at any time on or after May 10, 1999 and
prior to the Expiration Date, (i) the Minimum Tender Condition, the HSR
Condition, or the Defensive Action Condition has not been satisfied, or (ii) any
of the following events shall occur or shall be determined by the Purchaser to
have occurred:
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(a) there shall have been threatened, instituted or pending any action,
proceeding, claim or application by any government or governmental
regulatory or administrative authority or agency, domestic, foreign or
supranational, or by any other person, domestic or foreign, before any court
or governmental, regulatory or administrative agency, authority or tribunal,
domestic, foreign or supranational, that (i) challenges or seeks to make
illegal, to delay or otherwise directly or indirectly to restrain or
prohibit, or which is likely to impose, in the sole judgment of the
Purchaser, voting, procedural, price or other requirements in connection
with the acquisition of Shares by the Purchaser or any of its affiliates,
the making of the Offer, the acceptance for payment of or payment for Shares
by the Purchaser or any of its affiliates or the consummation of the
Proposed Merger or any other business combination involving the Company, or
the performance of any of the contracts or other arrangements entered into
by the Purchaser or any of its affiliates in connection with the acquisition
of the Company or seek to obtain any material damages as a result thereof or
otherwise directly or indirectly relating to the Offer or the Proposed
Merger or such other business combination, (ii) seeks to restrain, prohibit
or limit the exercise of full rights of ownership or operation by the
Purchaser or any of its affiliates of all or any portion of the business or
assets of the Company or any of its subsidiaries or the Purchaser or any of
its affiliates, or to compel the Purchaser or any of its affiliates to
dispose of or to hold separately all or any portion of the business or
assets of the Company or any of its subsidiaries or the Purchaser or any of
its affiliates, (iii) imposes or seeks to impose limitations on the ability
of the Purchaser or any of its affiliates effectively to acquire or hold or
to exercise full rights of ownership of Shares, including without limitation
the right to vote the Shares acquired or owned by the Parent, the Purchaser
or any of their affiliates on all matters properly presented to the
stockholders of the Company, or the right to vote any shares of capital
stock of any subsidiary directly or indirectly owned by the Company, (iv)
seeks to require divestiture by the Parent, the Purchaser or any of their
affiliates of any Shares, (v) might result, in the sole judgment of the
Purchaser, in a diminution of the benefits expected to be derived by the
Purchaser or any of its affiliates as a result of the Offer or the Proposed
Merger or any other business combination involving the Company, or in a
diminution of the value of the Shares or the Company to the Purchaser or any
of its affiliates, (vi) challenges or adversely affects the Proposed Merger
or any other business combination involving the Company, or (vii) in the
sole judgment of the Purchaser might adversely affect the business,
operations (including, without limitation, results of operation), properties
(including, without limitation, intangible properties), condition (financial
or otherwise), assets or liabilities (including, without limitation,
contingent liabilities) or prospects of either the Company or any of its
subsidiaries or affiliates or the Parent, the Purchaser or any of their
respective affiliates; or
(b) other than the waiting period under the HSR Act and the necessity
for the approvals and other actions by any domestic (federal and state),
foreign or supranational governmental, administrative or regulatory agency
described in Section 15, there shall have been proposed, sought,
promulgated, enacted, entered, enforced or deemed applicable to the Offer,
the Proposed Merger or any other business combination involving the Company,
by any government or governmental, regulatory or administrative agency or
authority or by any court or tribunal, in each case whether domestic,
foreign or supranational, any statute, rule, regulation, judgment, decree,
decision, order or injunction that, in the sole judgment of the Purchaser,
might, directly or indirectly, result in any of the consequences referred to
in clauses (i) through (vii) of paragraph (a) above; or
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, stockholders' equity, financial condition,
capitalization, licenses, franchises, permits, operations, results of
operations or prospects of the Company or affiliates (or the Purchaser shall
have become aware thereof) or in general economic or financial market
conditions in the United States or abroad that, in the sole judgment of the
Purchaser, is or may be materially adverse to the Company or any of its
affiliates, or the Purchaser shall have become aware of any facts that, in
the sole judgment of the Purchaser, have
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or may have material adverse significance with respect to either the value
of the Company or any of its affiliates, or the value of the Shares to the
Parent, the Purchaser or any of their affiliates; or
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the United States over-the-counter market, (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any material adverse change (or any existing or
threatened condition, event or development involving a prospective material
adverse change) in United States or any other currency exchange rates or a
suspension of, or a limitation on, the markets therefor, (iv) any other
material adverse change in the market price of the Shares or in the United
States securities or financial markets generally, including without
limitation, a decline of at least 10% in either the Dow Jones Average of
Industrial Stocks or the Standard & Poor's 500 Stock Index from May 10, 1999
through the date of termination or expiration of the Offer, (v) the
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (vi) any
limitation (whether or not mandatory) by any governmental authority or any
other event that, in the sole judgment of the Purchaser, may have material
adverse significance with respect to the extension of credit by banks or
other lending institutions or the financing of the Offer, the Proposed
Merger or any other business combination involving the Company or (vii) in
the case of any of the situations described in clauses (i) through (vi)
above existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(e) a tender or exchange offer for some or all of the Shares shall have
been publicly proposed to be made or shall have been made by another person
(including the Company or any of its affiliates), or it shall have been
publicly disclosed or the Purchaser shall have otherwise learned that (i)
any person, entity (including the Company or any of its affiliates) or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall
have acquired or proposed to acquire beneficial ownership of more than 10%
of any class or series of capital stock of the Company (including the
Shares) through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 10%
of any class or series of capital stock of the Company (including the
Shares), other than acquisitions for bona fide arbitrage purposes only and
other than as disclosed in a Schedule 13D or 13G on file with the SEC prior
to May 6, 1999, (ii) any such person, entity or group which, prior to such
date, had filed such a Schedule with the SEC, shall have acquired or
proposed to acquire, through the acquisition of stock, the formation of a
group or otherwise, beneficial ownership of additional shares of any class
or series of capital stock of the Company (including the Shares)
constituting 2% or more of any such class or series, or shall have been
granted any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of shares of any class or series of capital stock of
the Company (including the Shares) constituting 2% or more of any such class
or series, (iii) any person, entity or group shall have entered into a
definitive agreement or an agreement in principle or made a proposal with
respect to a tender or exchange offer for some or all the Shares or a
merger, consolidation or other business combination with or involving the
Company or any of its affiliates or (iv) any person, entity or group shall
have filed a Notification and Report Form under the HSR Act or made a public
announcement reflecting an intent to acquire the Company or any assets or
securities of the Company; or
(f) the Company shall have, directly or indirectly, (i) split, combined
or otherwise changed, or authorized or proposed the split, combination or
other change of, the Shares or its capitalization, (ii) acquired or
otherwise caused a reduction in the number of, or authorized or proposed the
acquisition or other reduction in the number of, any outstanding Shares or
other securities of the Company, (iii) issued, distributed or sold, or
authorized, proposed or announced the issuance, distribution or sale of, (A)
any additional Shares, shares of any other class or series of capital stock,
other voting securities or any securities convertible into or exchangeable
or exercisable for any of the foregoing, or options, rights or warrants,
conditional or otherwise, to acquire any of the foregoing in accordance with
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their terms, or (B) any other securities or rights in respect of, in lieu of
or in substitution or exchange for any shares of its capital stock, (iv)
permitted the issuance or sale of any shares of any class of capital stock
or other debt or equity securities of any subsidiary of the Company or any
securities convertible into or exchangeable or exercisable for any of the
foregoing, (v) declared, paid or proposed to declare or pay any dividend or
other distribution, whether payable in cash, securities or other property,
on or in respect of any Shares, (vi) altered or proposed to alter any
material term of any outstanding security of the Company, (vii) issued,
distributed or sold, or authorized or proposed the issuance, distribution or
sale of, any debt securities or securities convertible into or exchangeable
or exercisable for debt securities or any rights, warrants or options
entitling the holder thereof to purchase or otherwise acquire any debt
securities, or otherwise incurred, authorized or proposed the incurrence of
any debt other than in the ordinary course of business and consistent with
past practice or any debt containing burdensome covenants, (viii)
authorized, recommended, proposed, effected or announced its intention to
engage in any merger (other than the Proposed Merger), consolidation,
liquidation, dissolution, business combination, acquisition (including by
way of exchange) of assets or securities, disposition (including by way of
exchange) of assets or securities, joint venture, any release or
relinquishment of any material contract or other rights of the Company or
any of its affiliates or any comparable event not in the ordinary course of
business, (ix) authorized, recommended, proposed or announced its intent to
enter into, or entered into any agreement or arrangement with any person,
entity or group that in the sole judgment of the Purchaser, has or may have
material adverse significance with respect to the value of the Company or
any of its affiliates, or the value of the Shares to the Purchaser or any of
its affiliates, (x) amended or proposed, adopted or authorized any amendment
to the Charter or the By-Laws or similar organizational documents of the
Company or the Purchaser shall have learned that the Company shall have
proposed or adopted any such amendment which shall not have been previously
disclosed, (xi) entered into or amended any employment, severance or similar
agreement, arrangement or plan with or for the benefit of any employee of
the Company (other than in the ordinary course of business) or so as to
provide for increased or accelerated benefits to employees as a result of or
in connection with the making of the Offer, the acceptance for payment of or
payment for Shares by the Purchaser or the consummation by the Purchaser or
any of its affiliates of the Proposed Merger or any other business
combination involving the Company, (xii) except as may be required by law,
taken any action to terminate or amend any employee benefit plan (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended) of the Company or any of its affiliates, or the Purchaser shall
have become aware of any such action which shall not have been previously
disclosed, or (xiii) agreed in writing or otherwise to take any of the
foregoing actions; or
(g) the Purchaser shall become aware (i) that any material contractual
right of the Company shall be impaired or otherwise adversely affected or
that any material amount of indebtedness of the Company shall become
accelerated or otherwise become due or become subject to acceleration prior
to its stated due date, in each case with or without notice or the lapse of
time or both, as a result of or in connection with the Offer or the
consummation by the Purchaser or any of its affiliates of the Proposed
Merger or any other business combination involving the Company, (ii) of any
covenant, term or condition in any of the instruments or agreements of the
Company that, in the sole judgment of the Purchaser, is or may be (whether
considered alone or in the aggregate with other such covenants, terms or
conditions) materially adverse to either the value of the Company (including
without limitation any event of default that may occur as a result of or in
connection with the Offer, the consummation by the Purchaser or any of its
affiliates of the Proposed Merger or any other business combination
involving the Company) or the value of the Shares to the Purchaser or any of
its affiliates or the consummation by the Purchaser or any of its affiliates
of the Proposed Merger or any other business combination involving the
Company, or (iii) that any report, document, instrument, financial statement
or schedule of the Company filed with the SEC contained, when filed, an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or
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necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; or
(h) any approval, permit, authorization or consent of any domestic or
foreign or supranational governmental, administrative or regulatory agency
(federal, state, local, provincial or otherwise) (including those described
or referred to in Section 15) which is required or believed to be
appropriate shall not have been obtained on terms satisfactory to the
Purchaser in its sole discretion; or
(i) the Purchaser or any of its affiliates shall have entered into a
definitive agreement or announced an agreement in principle with respect to
the Proposed Merger or any other business combination with the Company or
any of its affiliates or the purchase of any material portion of the
securities or assets of the Company, or the Purchaser or any of its
affiliates and the Company shall have agreed that the Purchaser shall amend
or terminate the Offer or postpone payment for the Shares pursuant thereto.
The foregoing conditions (in addition to the Minimum Tender Condition, the
HSR Condition, and the Defensive Action Condition described in the Introduction)
are for the sole benefit of the Purchaser and may be waived by the Purchaser in
whole or in part at any time and from time to time in its sole discretion. Any
determination by the Purchaser concerning the events described above shall be
final and binding upon all parties including tendering stockholders. The failure
by the Purchaser at any time to exercise any of the foregoing rights shall not
be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
A public announcement will be made of a material change in, or waiver of,
such conditions, to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, and the Offer will be extended in connection with any such change
or waiver to the extent required by such rules.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
GENERAL. Except as set forth below, based upon an examination of publicly
available filings made by the Company with the SEC and other publicly available
information concerning the Company, neither the Purchaser nor the Parent is
aware of any licenses or other regulatory permits that appear to be material to
the business of the Company, taken as a whole, that might be adversely affected
by the Purchaser's acquisition of Shares as contemplated herein, or of any
filings, approvals or other actions by or with any domestic (federal or state),
foreign or supranational governmental authority or administrative or regulatory
agency that would be required prior to the acquisition of Shares by the
Purchaser pursuant to the Offer as contemplated herein. Should any such approval
or other action be required, it is the Purchaser's present intention to seek
such approval or action. However, the Purchaser does not presently intend to
delay the purchase of Shares tendered pursuant to the Offer pending the receipt
of any such approval or the taking of any such action (subject to the
Purchaser's right to delay or decline to purchase Shares if any of the
conditions in Section 14 shall have occurred). There can be no assurance that
any such approval or other action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result to the
business of the Company, the Parent or the Purchaser or that certain parts of
the businesses of the Company, the Parent or the Purchaser might not have to be
disposed of or held separate or other substantial conditions complied with in
order to obtain such approval or other action or in the event that such approval
was not obtained or such other action was not taken, any of which could cause
the Purchaser to elect to terminate the Offer without the purchase of the Shares
thereunder. The Purchaser's obligation under the Offer to accept for payment and
pay for Shares is subject to certain conditions, including conditions relating
to the legal matters discussed in this Section 15. See Section 14.
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STATE TAKEOVER STATUTES. A number of states have adopted "takeover"
statutes that purport to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets, security
holders, employees, principal executive offices or principal places of business
in such states. The Company conducts business in a number of states throughout
the United States, some of which have enacted "takeover" statutes. Except as
discussed herein, the Purchaser does not know whether any of these statutes
will, by their terms, apply to the Offer, and has not complied with any such
statutes. To the extent that certain provisions of these statutes purport to
apply to the Offer, the Purchaser believes that there may be reasonable bases
for contesting such statutes. The Company is incorporated under the laws of the
State of Colorado and has its principal executive offices, manufacturing
facilities and a majority of its assets located in Colorado, which has not
enacted a "takeover" statute. If any person should seek to apply any state
takeover statute, the Purchaser would take such action as then appears
desirable, which action may include challenging the validity or applicability of
any such statue in appropriate court proceedings. If it is asserted that one or
more takeover statutes apply to the Offer, and it is not determined by an
appropriate court that such statute or statutes do not apply or are invalid as
applied to the Offer, the Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities, and
the Purchaser might be unable to purchase or pay for Share tendered pursuant to
the Offer, or be delayed in continuing or consummating the Offer. In such case,
the Purchaser may not be obligated to accept for payment, or pay for, Shares
tendered. See Section 14.
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder, certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division and the FTC and
certain waiting period requirements have been satisfied. The acquisition of
Shares pursuant to the Offer is subject to such requirements. See the
Introduction and Section 14.
The Parent will file on the date hereof with the FTC and the Antitrust
Division a Pre-merger Notification and Report Form in connection with the
purchase of Shares pursuant to the Offer. Under the provisions of the HSR Act
applicable to the Offer, the purchase of Shares pursuant to the Offer may not be
consummated until the expiration of a 15-calendar day waiting period following
the filing by the Parent and notification to the Company of such filing.
Accordingly, it is expected that the waiting period under the HSR Act applicable
to the Offer will expire at 11:59 p.m., New York City time, on Tuesday, May 25,
1999, unless, prior to the expiration or termination of the waiting period, the
FTC or the Antitrust Division extends the waiting period by requesting
additional information or documentary material from the Parent. If either the
FTC or the Antitrust Division were to request additional information or
documentary material from the Parent, the waiting period would expire at 11:59
p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by the Parent with such request. Thereafter, the waiting
period could be extended by court order or by consent of the Parent. The waiting
period under the HSR Act may be terminated by the FTC and the Antitrust Division
prior to its expiration. If the acquisition of Shares is delayed pursuant to a
request by the FTC or the Antitrust Division for additional information or
documentary material pursuant to the HSR Act, the Offer may, but need not, be
extended and in any event the purchase of and payment for Shares will be
deferred until ten days after the request is substantially complied with, unless
the waiting period is sooner terminated by the FTC and the Antitrust Division.
Only one extension of such waiting period pursuant to a request for additional
information is authorized by the HSR Act and the rules promulgated thereunder,
except by court order or by consent of the Parent. Any such extension of the
waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law. See Section 4. Although the Company is required
to file certain information and documentary material with the Antitrust Division
and the FTC in connection with the Offer, neither the Company's failure to make
such filings nor a request from the Antitrust Division or the FTC for additional
information or documentary material made to the Company will extend the waiting
period.
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The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
the Purchaser pursuant to the Offer. At any time before or after the purchase by
the Purchaser of Shares pursuant to the Offer, either the FTC or the Antitrust
Division could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
the Purchaser or the divestiture of substantial assets of the Parent, its
subsidiaries or the Company. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances.
Based upon an examination of publicly available information relating to the
businesses in which the Company is engaged, the Parent believes that the
acquisition of Shares pursuant to the Offer and the Proposed Merger would not
violate antitrust laws. The Parent believes that retention of all of the
operations of the Company and the Parent should be permitted under the antitrust
laws. Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made, or, if such challenge is made, what the
result will be.
16. FEES AND EXPENSES.
The Purchaser has retained Nesbitt Burns Securities Inc. to act as the
Dealer Manager and to provide certain financial advisory services in connection
with the proposed acquisition of the Company. In connection with such services,
the Purchaser has agreed to pay Nesbitt Burns Securities Inc. a fee of $50,000,
plus a success fee equal to $.10 per share tendered in the Offer or in the
Proposed Merger. If a deal results between the Purchaser or the Parent and the
Company other than the stock acquisition contemplated by the Offer and the
Proposed Merger, the Purchaser will pay the Dealer Manager a success fee in the
amount of $260,000. The Parent and the Purchaser jointly and severally will also
reimburse Nesbitt Burns Securities Inc. for certain out-of-pocket expenses,
including attorneys' fees. The Parent and the Purchaser jointly and severally
will also indemnify Nesbitt Burns Securities, Inc. against certain liabilities
and expenses in connection with the Offer, including certain liabilities under
the federal securities laws. In the ordinary course of its business, Nesbitt
Burns Securities Inc. engages in securities trading, market-making and brokerage
activities and may, at any time, hold long or short positions and may trade or
otherwise effect transactions in securities of the Company.
The Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, facsimile, telegraph and personal interviews and may
request brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to beneficial owners of Shares. The Information Agent will
receive reasonable and customary compensation for its services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the federal securities laws.
In addition, Harris Trust Company of New York has been retained as the
Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith, including certain
liabilities under the federal securities laws.
Except as set forth above, the Purchaser will not pay any fees or
commissions to any broker or dealer or any other person for soliciting tenders
of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies will, upon request only, be reimbursed by the Purchaser for customary
mailing and handling expenses incurred by them in forwarding material to their
customers.
17. MISCELLANEOUS.
The Purchaser is not aware of any jurisdiction where the making of the Offer
is prohibited by any administrative or judicial action pursuant to any valid
state statute. If the Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of the Shares pursuant
thereto,
28
<PAGE>
the Purchaser will make a good faith effort to comply with such state statute.
If, after such good faith effort, the Purchaser cannot comply with any such
state statute, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) the holders of Shares in such state. In any jurisdiction where
the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by the Dealer Manager or one or more registered brokers or dealers
which are licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PARENT OR THE PURCHASER NOT CONTAINED IN THIS
OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Parent and the Purchaser have filed with the SEC a Tender Offer
Statement on Schedule 14D-1, together with exhibits (the "Schedule 14D-1"),
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the Offer. The Schedule 14D-1, and any amendments
thereto, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 8 (except that they will not be
available at the regional offices of the SEC).
WHITMAN'S CANDIES, INC.
WC-RMA CORP.
May 10, 1999
29
<PAGE>
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE
OFFICERS OF THE PARENT AND THE PURCHASER
DIRECTORS AND EXECUTIVE OFFICERS OF THE PARENT. The following table sets
forth the name, business address, present principal occupation, and employment
and material occupations, positions, offices, or employments for the past five
years of all directors and executive officers of the Parent. Unless otherwise
indicated, the principal business address of each executive officer of the
Parent is 1000 Walnut Street, Suite 900, Kansas City, Missouri and each
occupation set forth opposite an individual's name refers to employment with the
Parent. Where no date is given for the commencement of the indicated office or
position, such office or position was assumed prior to May 10, 1994. Each person
listed below is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT POSITION WITH THE PARENT AND PRINCIPAL OCCUPATION OR
EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Scott H. Ward............................. Director, Co-President of the Parent since 1993.
Thomas S. Ward............................ Director, Co-President of the Parent since 1993.
Linda L. Ward O'Hara...................... Director, Vice President of the Parent since 1993.
Richard S. Masinton....................... Chief Financial Officer/Chief Administrative Officer of the Parent
since February 1997. Senior Vice President and Chief Financial
Officer of Westlake Hardware, Inc.--1990-January 1997.
Robinn S. Weber........................... Vice President--Human Resources of the Parent.
Robert L. Love............................ Senior Vice President--Sales of the Parent since February 1999.
Director National Accounts and Trade Development, Hershey Foods
Corporation.
Robert G. Maack........................... Vice President--Production Scheduling of the Parent.
Harold G. Wattjes......................... Vice President--Manufacturing of the Parent.
</TABLE>
DIRECTORS AND OFFICERS OF THE PURCHASER. Set forth below are the name and
position with the Purchaser of each director of the Purchaser. The principal
address of the Purchaser and the current business address of each individual
listed below is 1000 Walnut Street, Suite 900, Kansas City, Missouri. Each such
person is a citizen of the United States. Information with respect to Messrs
Scott H. Ward and Thomas S. Ward and Ms. Linda L. Ward O'Hara, who are directors
and executive officers of the Parent, and Mr. Richard S. Masinton, who is an
executive officer of the Parent, is set forth above in "Directors and Executive
Officers of the Parent".
<TABLE>
<CAPTION>
PRESENT POSITION WITH THE PURCHASER AND
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Scott H. Ward............................. Director: Co-President.
Thomas S. Ward............................ Director; Co-President.
Linda L. Ward O'Hara...................... Director; Vice President.
Richard S. Masinton....................... Chief Administrative Officer and Secretary.
</TABLE>
30
<PAGE>
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
BY HAND AND OVERNIGHT
BY MAIL: CARRIER:
<S> <C>
Wall Street Station Wall Street Plaza
P.O. Box 1010 88 Pine Street
New York, New York New York, New York
10268-1010 10005
</TABLE>
BY FACSIMILE TRANSMISSION:
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
THE INFORMATION AGENT FOR THE OFFER IS:
D. F. KING & CO., INC.
77 Water Street, 20th Floor
New York, New York 10005
Banks and Brokers Call Collect: (212) 425-1685
All Others Call: (800) 207-3155
THE DEALER MANAGER FOR THE OFFER IS:
[NESBITT BURNS SECURITIES INC. LOGO]
111 West Monroe Street
20th Floor--East
Chicago, Illinois 60603
(Toll Free)
(877) 377-3317
31
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
PURSUANT TO THE OFFER TO PURCHASE, DATED MAY 10, 1999
BY
WC-RMA CORP.
A WHOLLY OWNED SUBSIDIARY
OF
WHITMAN'S CANDIES, INC.
-----------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON WEDNESDAY, JUNE 16, 1999, UNLESS THE OFFER IS EXTENDED.
------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
Harris Trust Company of New York
<TABLE>
<S> <C>
BY MAIL: BY HAND/OVERNIGHT DELIVERY:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
</TABLE>
BY FACSIMILE TRANSMISSION:
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OR TELEX TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
-------------------------------------------------------------------------------------------
NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE CERTIFICATE(S) TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) (ATTACH ADDITIONAL SIGNED SCHEDULE IF
APPEAR(S) ON CERTIFICATE(S)) NECESSARY)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
SHARE OF SHARES NUMBER OF
CERTIFICATE(S) REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
- ---------------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL SHARES
- ---------------------------------------------------------------------------------------------
* NEED NOT BE COMPLETED BY STOCKHOLDERS TENDERING BY BOOK-ENTRY TRANSFER.
** UNLESS OTHERWISE INDICATED, IT WILL BE ASSUMED THAT ALL SHARES REPRESENTED BY SHARE
CERTIFICATES DELIVERED TO THE DEPOSITARY ARE BEING TENDERED. SEE INSTRUCTION 4.
-----------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE>
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by the stockholders of Rocky
Mountain Chocolate Factory, Inc. either (i) if Certificates (as defined below)
evidencing Shares (as defined below) are to be forwarded herewith or unless an
Agent Message (as defined in Instruction 2 below) is utilized, (ii) if delivery
of Shares is to be made by book-entry transfer to the Depositary's account at
the Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to
the book-entry transfer procedure described in "Procedures for Tendering Shares"
of the Offer to Purchase (as defined below). DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates for Shares and all other required documents to the
Depositary before the Expiration Date (as defined in the Offer to Purchase) or
whose Shares cannot be delivered on a timely basis pursuant to the procedure for
book-entry transfer must tender their Shares according to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. See
Instruction 2.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s): ___________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to WC-RMA Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Whitman's Candies, Inc., a
Missouri corporation (the "Parent"), the above described shares of common stock,
par value $0.03 per share (the "Shares") of Rocky Mountain Chocolate Factory,
Inc., a Colorado corporation (the "Company"), at a price of $5.75 per Share, net
to the seller in cash, without interest thereon (the "Offer Price"), upon the
terms and subject to the conditions set forth in the Offer to Purchase dated May
10, 1999 (the "Offer to Purchase") and in this Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"), receipt of which is
hereby acknowledged. The undersigned understands that the Purchaser reserves the
right to transfer or assign, in whole at any time, or in part from time to time,
to one or more of its affiliates, the right to purchase all or any portion of
the Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve the Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser all right, title and interest in and to all the Shares
that are being tendered hereby (and any and all dividends, distributions,
rights, other Shares or other securities issued or issuable in respect thereof
or declared, paid or distributed in respect of such Shares on or after May 10,
1999 (collectively, "Distributions")), purchased pursuant to the Offer and
irrevocably appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares and all
Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Certificates for such Shares (individually, a "Certificate") and all
Distributions, or transfer ownership of such Shares and all Distributions on the
account books maintained by the Book-Entry Transfer Facility, together, in
either case, with all accompanying evidence of transfer and authenticity to, or
upon the order of the Purchaser, (ii) present such Shares and all Distributions
for transfer on the books of the Company, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares and all
Distributions, all in accordance with the terms and subject to the conditions of
the Offer.
The undersigned irrevocably appoints designees of the Purchaser as such
stockholder's proxy, each with full power of substitution to the full extent of
such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to all
Distributions. Such appointment will be effective when, and only to the extent
that, the Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior proxies given by such stockholder with respect to such Shares
(and, if applicable, such other shares and securities) will be revoked without
further action, and no subsequent proxies may be given nor any subsequent
written consents executed (and if given or executed, will not be deemed
effective). The designees of the Purchaser will be empowered to exercise all
voting and other rights of such stockholder as they in their sole discretion may
deem proper at any annual or special meeting of the Company's stockholders or
any adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. The Purchaser reserves the right to require that, in order
for Shares to be deemed validly tendered, immediately upon the Purchaser's
payment for such Shares, the Purchaser must be able to exercise full voting
rights with respect to such Shares.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned own(s) the Shares tendered
hereby and that, when such Shares are accepted for payment by the Purchaser, the
Purchaser will acquire good, marketable and unencumbered title thereto and to
all Distributions, free and clear of all liens, restrictions, charges and
encumbrances, and that none of such Shares and
3
<PAGE>
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Distributions. In
addition, the undersigned shall remit and transfer promptly to the Depositary
for the account of the Purchaser all Distributions in respect of the Shares
tendered hereby, accompanied by appropriate documentation of transfer, and,
pending such remittance and transfer or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares tendered
hereby or deduct from such purchase price, the amount or value of such
Distribution as determined by the Purchaser in its sole discretion. The
undersigned further represents and warrants that the undersigned has read and
agrees to all terms of the Offer.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, executors, personal and legal representatives, administrators,
trustees in bankruptcy, successors and assigns of the undersigned. Except as
stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in "Procedures for Tendering Shares" of the Offer to
Purchase and in the Instructions hereto will constitute the undersigned's
acceptance of the terms and conditions of the Offer. The Purchaser's acceptance
for payment of Shares tendered pursuant to the Offer will constitute a binding
agreement between the undersigned and the Purchaser upon the terms and subject
to the conditions of the Offer (and if the Offer is extended or amended, the
terms or conditions of any such extension or amendment). Without limiting the
foregoing, if the price to be paid in the Offer is amended in accordance with
the Offer, the price to be paid to the undersigned will be the amended price
notwithstanding the fact that a different price is stated in this Letter of
Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, the Purchaser may not be required to accept for
payment any of the Shares tendered hereby. The undersigned acknowledges that no
interest will be paid on the offer price for tendered Shares regardless of any
extension of the Offer or any delay in making such payment.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price and/or return any
Certificates evidencing Shares not tendered or accepted for payment, in the
name(s) of the registered holder(s) appearing above under "Description of Shares
Tendered." Similarly, unless otherwise indicated in the box entitled "Special
Delivery Instructions," please mail the check for the purchase price and/or
return any Certificates evidencing Shares not tendered or accepted for payment
(and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing above under "Description of Shares Tendered." In
the event that the box entitled "Special Payment Instructions" and/or "Special
Delivery Instructions" are completed, please issue the check for the purchase
price and/or return any Certificates for Shares not purchased or not tendered or
accepted for payment in the name(s) of, and/or mail such check and/or return
such Certificates to, the person(s) so indicated. Unless otherwise indicated
herein in the box entitled "Special Payment Instructions," please credit any
Shares tendered hereby and delivered by book-entry transfer, but which are not
purchased, by crediting the account at the Book-Entry Transfer Facility
designated above. The undersigned recognizes that the Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name of the registered holder(s) thereof if the Purchaser does not
accept for payment any of the Shares tendered hereby.
Effective upon the receipt of payment for tendered Shares by the undersigned
stockholder(s), the undersigned stockholder(s), on behalf of themselves and on
behalf of any beneficial owner of the tendered Shares, and on behalf of all
spouses, heirs, predecessors, successors, assigns, representatives, agents,
parent or subsidiary corporations of such tendering stockholder(s) or such
beneficial owner of the tendered Shares (including without limitation any trust
of which the undersigned tendering stockholder(s) is the trustee or which is for
the benefit of any undersigned tendering stockholder(s) or member of his
family),
4
<PAGE>
releases and discharges any and all claims that any such person or entity has,
had or may have against Parent, the Purchaser, the Company and, without
limitation, the Other Related Persons (as defined in the following sentence)
arising out of, or related to, the price offered in the Offer or the
consideration received by tendering stockholder(s) in the Offer. The term "Other
Related Persons" as used in the preceding sentence shall mean each of Parent's,
the Purchaser's, and Company's past or present directors, officers, employees,
partners, principals, agents, insurers or co-insurers, controlling stockholders,
parent or subsidiary corporations, affiliates, attorneys, advisors, legal
representatives, and assigns.
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES:
- ------------------------
- -------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7
OF THIS LETTER OF TRANSMITTAL)
To be completed ONLY if Certificates for Shares not purchased and/or the
Certificate for Shares not tendered or check for the purchase price of
Shares purchased are to be issued in the name of someone other than the
undersigned.
Issue / / Check and/or / / Certificates to:
Name: ______________________________________________________________________
(PLEASE TYPE OR PRINT)
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
____________________________________________________________________________
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 included herein)
- -------------------------------------------------------------
- -------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7
OF THIS LETTER OF TRANSMITTAL)
To be completed ONLY if Certificates not tendered or not purchased and/or
the check for the purchase price of Shares purchased are to be sent to
someone other than the undersigned, or to the undersigned at an address
other than that shown above.
Mail / / Check and/or / / Certificates to:
Name: ______________________________________________________________________
(PLEASE TYPE OR PRINT)
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
____________________________________________________________________________
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 included herein)
- ------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
____________________________________________________________________________
____________________________________________________________________________
(SIGNATURE(S) OF HOLDER(S))
Dated: __________________, 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificate(s) or on a security position listing or by person(s) authorized
to become registered holder(s) by Certificates and documents transmitted
herewith. If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative capacity, please provide the following information. See
Instruction 5 of this Letter of Transmittal.)
Name(s): ___________________________________________________________________
(PLEASE TYPE OR PRINT)
Capacity (full title): _____________________________________________________
Address: ___________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ____________________________________________
Tax Identification or Social Security Number: ______________________________
(COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5 OF THIS LETTER OF TRANSMITTAL)
Authorized Signature(s): ___________________________________________________
Name: ______________________________________________________________________
(PLEASE TYPE OR PRINT)
Title: _____________________________________________________________________
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ____________________________________________
Dated: __________________, 1999
- --------------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm which is a
bank, broker, dealer, credit union, savings association, or other entity that is
a member in good standing of the Securities Transfer Agents Medallion Program
(each, an "Eligible Institution"). No signature guarantee is required on this
Letter of Transmittal (i) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of Shares tendered herewith,
unless such holder(s) has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" included
herein, or (ii) if such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be used either (i) if
Certificates evidencing Shares are to be forwarded herewith or (ii) if Shares
are to be delivered by book-entry transfer pursuant to the procedure set forth
in "Procedures for Tendering Shares" of the Offer to Purchase. Certificates
evidencing all tendered Shares, or confirmation of a book-entry transfer of such
Shares, if such procedure is available, into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedures set forth in "Procedures
for Tendering Shares" of the Offer to Purchase, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message, as defined below) and any other documents required by this
Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date (as defined in "Terms of
the Offer; Expiration Date" of the Offer to Purchase). If Certificates are
forwarded to the Depositary in multiple deliveries, a properly completed and
duly executed Letter of Transmittal must accompany each such delivery.
Stockholders whose Certificates are not immediately available, who cannot
deliver their Certificates and all other required documents to the Depositary
prior to the Expiration Date or who cannot complete the procedure for delivery
by book-entry transfer on a timely basis may tender their Shares pursuant to the
guaranteed delivery procedure described in "Procedures for Tendering Shares" of
the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made
by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
the Purchaser herewith (with any required signature guarantees), must be
received by the Depositary prior to the Expiration Date; and (iii) in the case
of a guarantee of Shares, the Certificates, in proper form for transfer, or a
confirmation of a book-entry transfer of such Shares, if such procedure is
available, into the Depositary's account at the Book-Entry Transfer Facility, in
each case together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message), and
any other documents required by this Letter of Transmittal, must be received by
the Depositary within three NASDAQ Stock Market trading days after the date of
execution of the Notice of Guaranteed Delivery, all as described in "Procedures
for Tendering Shares" of the Offer to Purchase.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, CERTIFICATES AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE SOLE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY
7
<PAGE>
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering stockholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Certificate numbers, the number of Shares
evidenced by such Certificates and the number of Shares tendered should be
listed on a separate signed schedule and attached hereto.
4. PARTIAL TENDERS. (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER.) If fewer than all the Shares evidenced by any Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Certificate(s) evidencing the remainder of the
Shares that were evidenced by the Certificates delivered to the Depositary
herewith will be sent to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Delivery Instructions,"
as soon as practicable after the expiration or termination of the Offer. All
Shares evidenced by Certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are different
registrations of such Certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Certificates or separate stock powers
are required, unless payment is to be made to, or Certificates evidencing Shares
not tendered or not purchased are to be issued in the name of, a person other
than the registered holder(s), in which case, the Certificate(s) evidencing the
Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such Certificate(s). Signatures on such Certificate(s) and stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Certificate(s) tendered
hereby must be endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name(s) of the registered holder(s) appear(s) on such
Certificate(s). Signatures on such Certificate(s) and stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Certificate(s) or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Purchaser of such person's authority so to act must be submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, the Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the
8
<PAGE>
registered holder(s), such other person or otherwise) payable on account of the
transfer to such other person will be deducted from the purchase price of such
Shares purchased, unless evidence satisfactory to the Purchaser of the payment
of such taxes, or exemption therefrom, is submitted. Except as provided in this
Instruction 6, it will not be necessary for transfer tax stamps to be affixed to
the Certificate(s) evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Certificate is to be sent to someone other than the person(s)
signing this Letter of Transmittal or to the person(s) signing this Letter of
Transmittal but at an address other than that shown in the box entitled
"Description of Shares Tendered," the appropriate boxes on this Letter of
Transmittal must be completed. Shares tendered hereby by book-entry transfer may
request that Shares not purchased be credited to such account maintained at the
Book-Entry Transfer Facility as such stockholder may designate in the box
entitled "Special Payment Instructions" on the reverse hereof. If no such
instructions are given, all such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility as the account from
which such Shares were delivered.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for
assistance may be directed to the Information Agent at its address and phone
number set forth herein. Additional copies of the Offer to Purchase, this Letter
of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
obtained from the Information Agent or from brokers, dealers, commercial banks
or trust companies.
9. WAIVER OF CONDITIONS. The Purchaser reserves the absolute right in its
sole discretion to waive, at any time or from time to time, any of the specified
conditions of the Offer, in whole or in part, in the case of any Shares
tendered.
10. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of federal income tax. If
a tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price of all
Shares purchased from such stockholder. If the tendering stockholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. Notwithstanding that "Applied For" is written in Part I,
the Depositary will withhold 31% on all payments of the purchase price to such
tendering stockholder prior to the time a properly certified TIN is provided to
the Depositary. However, such amounts will be refunded to such stockholder if a
TIN is provided to the Depositary within 60 days.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Certificate(s). This Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost or
destroyed Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, WITH ANY REQUIRED SIGNATURE GUARANTEES,
9
<PAGE>
OR AN AGENT'S MESSAGE (TOGETHER WITH CERTIFICATES FOR SHARES OR CONFIRMATION OF
BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR, IF APPLICABLE, A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies with respect to a stockholder, the Depositary
is required to withhold 31% of any payments made to such stockholder. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN), and (b) that
(i) such stockholder has not been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such stockholder that such stockholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. Notwithstanding that
"Applied For" is written in Part I, the Depositary will withhold 31% on all
payments of the purchase price to such tendering stockholder prior to the time a
properly certified TIN is provided to the Depository. However, such amounts will
be refunded to such stockholder if a TIN is provided to the Depositary within 60
days.
10
<PAGE>
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK, AS DEPOSITARY AGENT
<TABLE>
<C> <S> <C>
- -----------------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE PROVIDE Social Security Number
FORM W-9 YOUR TIN IN THE BOX AT
Department of the Treasury RIGHT AND CERTIFY BY
Internal Revenue Service SIGNING AND DATING BELOW.
---------------------------------------------------------
PART II--For Payees Exempt OR
From Backup Withholding Employer Identification
(see enclosed Guidelines Number
and complete as instructed
therein)
-----------------------------If
awaiting TIN, write
"Applied For".
- -----------------------------------------------------------------------------------------
PART III--CERTIFICATION--Under penalties of perjury, I
certify that:
(1) The number shown on this form is my correct Taxpayer
Identification Number (or a Taxpayer Identification
Number has not been issued to me and either (a) I have
mailed or delivered an application to receive a Taxpayer
Identification Number to the appropriate Internal Revenue
Service ("IRS") or Social Security administration office
or (b) I intend to mail or deliver an application in the
near future.
(2) I am not subject to backup withholding because (a) I
am exempt from backup withholding, (b) I have not been
notified by the IRS that I am subject to backup
withholding as a result of failure to report all interest
or dividends or (c) the IRS has notified me that I am no
longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2)
above if you have been notified by the IRS that you are
Payer's Request subject to backup withholding because of under reporting
for Taxpayer
Identification Number
interest or dividends on your tax return. However, if
after being notified by the IRS that you were subject to
backup withholding you received another notification from
the IRS that you are no longer subject to backup
withholding, do not cross out item (2). (Also see
instructions in the enclosed Guidelines.)
---------------------------------------------------------
SIGNATURE: ------------------------ DATE:
----------------, 1999
- -----------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN THE
BOX IN PART III OF THE SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld, but that such amounts will be
refunded to me if I then provide a taxpayer identification number within sixty
(60) days.
SIGNATURE
- --------------------------------------------- DATE
- --------------, 1999
- --------------------------------------------------------------------------------
IMPORTANT: If a stockholder desires to accept the Offer, this Letter of
Transmittal (or a facsimile hereof), together with certificates of Book-Entry
Transfer and all other required documents, or the notice of guaranteed delivery,
must be received by the Depositary prior to the Expiration Date.
11
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be directed
to the Information Agent or the Dealer Manager:
THE INFORMATION AGENT FOR THE OFFER IS:
D. F. KING & CO., INC.
77 WATER STREET, 20TH FLOOR
NEW YORK, NEW YORK 10005
OR
Banks and Brokers Call Collect: (212) 425-1685
All Others Call Toll Free: (800) 207-3155
THE DEALER MANAGER FOR THE OFFER IS:
[NESBITT BURNS SECURITIES INC. LOGO]
111 WEST MONROE STREET
20TH FLOOR-EAST
CHICAGO, ILLINOIS 60603
OR
CALL TOLL FREE: 877-377-3317
12
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
TO
WC-RMA CORP.
A WHOLLY OWNED SUBSIDIARY OF
WHITMAN'S CANDIES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
AS SET FORTH IN SECTION 3 OF THE OFFER TO PURCHASE (AS DEFINED BELOW), THIS
FORM, OR A FORM SUBSTANTIALLY EQUIVALENT TO THIS FORM, MUST BE USED TO ACCEPT
THE OFFER (AS DEFINED BELOW) IF THE CERTIFICATES REPRESENTING SHARES OF COMMON
STOCK, PAR VALUE $0.03 PER SHARE, OF ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. (THE
"SHARES"), ARE NOT IMMEDIATELY AVAILABLE, IF TIME WILL NOT PERMIT ALL REQUIRED
DOCUMENTS TO REACH THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
THE OFFER TO PURCHASE), OR IF THE PROCEDURES FOR BOOK-ENTRY TRANSFER CANNOT BE
COMPLETED ON A TIMELY BASIS. SUCH FORM MAY BE DELIVERED BY HAND OR TRANSMITTED
BY TELEGRAM, FACSIMILE TRANSMISSION OR MAIL TO THE DEPOSITARY AND MUST INCLUDE A
GUARANTEE BY AN ELIGIBLE INSTITUTION (AS DEFINED IN SECTION 3 OF THE OFFER TO
PURCHASE). SEE SECTION 3 OF THE OFFER TO PURCHASE.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
BY MAIL: BY HAND/OVERNIGHT DELIVERY:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
</TABLE>
BY FACSIMILE TRANSMISSION:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to WC-RMA Corp., a Delaware corporation and a
wholly owned subsidiary of Whitman's Candies, Inc., a Missouri corporation, upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated May 10, 1999 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"), receipt of each of which is hereby acknowledged, the number of Shares
specified below pursuant to the guaranteed delivery procedures described in
"Procedures for Tendering Shares" of the Offer to Purchase.
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
<TABLE>
<S> <C>
Number of Shares: Name(s) of Record Holder(s):
Share Certificate Numbers (if available): Please Type or Print
/ / Check here if Shares will be delivered Address(es)
by book-entry transfer. Zip Code
Account Number: Area Code and Telephone Number(s):
Dated: , 199 Signature(s)
Dated: , 1999
</TABLE>
The undersigned, a participant in the Security Transfer Agents Medallion
Program (an "Eligible Institution"), hereby guarantees that either the
certificates representing the Shares tendered hereby in proper form for
transfer, or timely confirmation of a book-entry transfer of such Shares into
the Depositary's account at The Depository Trust Company (pursuant to procedures
set forth in Section 3 of the Offer to Purchase), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase), and any other documents required by the Letter of Transmittal,
will be received by the Depositary at one of its addresses set forth above
within three (3) NASDAQ Stock Market trading days after the date of execution
hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm:
Authorized Signature
Address: Name:
Please Type or Print
Title:
Zip Code
Dated: , 1999
Area Code and
Telephone Number:
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SUCH CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ANY AND ALL OF THE OUTSTANDING SHARES
OF
COMMON STOCK
OF
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
AT
$5.75 NET PER SHARE
BY
WC-RMA CORP.
A WHOLLY OWNED SUBSIDIARY OF
WHITMAN'S CANDIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 PM, NEW YORK CITY TIME, ON
WEDNESDAY, JUNE 16, 1999, UNLESS THE OFFER IS EXTENDED.
May 10, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by WC-RMA Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Whitman's Candies, Inc., a
Missouri corporation (the "Parent"), to act as Dealer Manager in connection with
the Purchaser's offer to purchase any and all outstanding shares of common
stock, par value $.03 per share (the "Shares"), of Rocky Mountain Chocolate
Factory, Inc., a Colorado corporation (the "Company"), at a price of $5.75 per
Share, net to the seller in cash, without interest thereon (the "Offer Price"),
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated May 10, 1999 (the "Offer to Purchase"), and the related letter of
transmittal (which, as amended from time to time, together constitute the
"Offer") enclosed herewith. Please furnish copies of the enclosed materials to
your clients for whom you hold Shares registered in your name or in the name of
your nominee, or who hold Shares registered in their own names.
Enclosed herewith are the following documents:
1. Offer to Purchase, dated May 10, 1999;
2. Letter of Transmittal for your use in accepting the Offer and tendering
Shares and for the information of your clients. Facsimile copies of the
Letter of Transmittal may be used to accept the Offer;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
certificates evidencing such Shares are not immediately available or time
will not permit all required documents to reach the Depositary prior to
the expiration date or the procedure for book-entry transfer cannot be
completed on a timely basis;
4. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominees, with
space provided for obtaining such clients' instructions with regard to
the Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelope addressed to the Depositary.
<PAGE>
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or who hold Shares
registered in their own names. Please bring the offer to their attention as
promptly as possible. The Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Depositary, the Dealer
Manager and the Information Agent as described in the Offer to Purchase) for
soliciting tenders of shares pursuant to the Offer. You will be reimbursed by
the Purchaser for customary mailing expenses incurred by you in forwarding any
of the enclosed materials to your clients. The Purchaser will pay or cause to be
paid any stock transfer taxes payable on the sale and transfer of Shares to it
or its order, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 PM,
NEW YORK CITY TIME, ON WEDNESDAY, JUNE 16, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, (1) a duly executed and properly
completed Letter of Transmittal, with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer of Shares, and any
other required documents should be sent to the Depositary and (2) either
certificates representing the tendered Shares should be delivered to the
Depositary, or such Shares should be tendered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase), all in accordance with the Instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the Dealer
Manager or the Information Agent at the respective addresses and telephone
numbers set forth on the back cover page of the Offer to Purchase.
Very truly yours,
NESBITT BURNS SECURITIES INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF PARENT, THE PURCHASER, THE DEPOSITARY, THE
DEALER MANAGER OR THE INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ANY AND ALL OF THE OUTSTANDING SHARES
OF
COMMON STOCK
OF
ROCKY MOUNTAIN CHOCOLATE
FACTORY, INC.
AT
$5.75 NET PER SHARE
BY
WC-RMA CORP.
A WHOLLY OWNED SUBSIDIARY OF
WHITMAN'S CANDIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME,
ON WEDNESDAY, JUNE 16, 1999, UNLESS THE OFFER IS EXTENDED.
May 10, 1999
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated May 10, 1999
(the "Offer to Purchase") and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") in connection with
the offer by WC-RMA Corp., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of Whitman's Candies, Inc., a Missouri corporation (the
"Parent"), to purchase any and all of the outstanding shares of common stock,
par value $.03 per share (the "Shares"), of Rocky Mountain Chocolate Factory,
Inc., a Colorado corporation (the "Company"), at a price of $5.75 per Share, net
to the seller in cash, without interest thereon (the "Offer Price"), upon the
terms and subject to the conditions set forth in the Offer.
The material is being sent to you as the beneficial owner of Shares held by
us for your account but not registered in your name. We are the holder of record
of Shares held by us for your account. A tender of such Shares can be made only
by us as the holder of record and pursuant to your instructions. The Letter of
Transmittal is furnished to you for your information only and cannot be used by
you to tender Shares held by us for your account.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
<PAGE>
Your attention is invited to the following:
1. The Offer Price is $5.75 per Share, net to the seller in cash, without
interest thereon.
2. The Offer and withdrawal rights will expire at 5:00 pm, New York City
time, on Wednesday, June 16, 1999, unless the Offer is extended.
3. The Offer is being made for any and all of the outstanding Shares.
4. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the expiration date (as
defined in the Offer to Purchase), a number of Shares, which, when added
to the Shares then beneficially owned by the Parent, the Purchaser or
their affiliates, constitutes at least a majority of the total number of
shares outstanding, on a fully diluted basis (the "Minimum Tender
Condition"); (2) expiration or termination of the applicable waiting
period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act") (the "HSR Condition"); (3) the Company
not having entered into or effectuated any agreement or transaction with
any person or entity (including its stockholders) or taken any action
having the effect of impairing the Purchaser's ability to acquire the
Company or otherwise diminishing the expected economic value to the
Purchaser of the acquisition of the Company, and the Company not
postponing its 1999 annual meeting of stockholders or taking any other
action that would impede the Parent's ability to nominate one or more
directors for election or its ability to make any other proposals to be
voted upon by stockholders at such meeting (the "Defensive Action
Condition"); and (4) satisfaction of the other conditions specified in
Section 14 of the Offer to Purchase.
5. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer. However, federal income tax backup
withholding at a rate of 31% may be required, unless an exemption is
provided or unless the required taxpayer identification information is
provided. See Instruction 10 of the Letter of Transmittal.
The Offer is made solely by the Offer to Purchase, and the related Letter of
Transmittal and is being made to all holders of Shares. The Purchaser is not
aware of any state where the making of the Offer is prohibited by administrative
or judicial action pursuant to any valid state statute. If the Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto, the Purchaser will make a good faith
effort to comply with such state statute. If, after such good faith effort, the
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of Shares in
such state. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by Nesbitt Burns Securities Inc. or
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified on the instruction form set forth in this
letter. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf prior to the expiration of the Offer.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER
TO PURCHASE FOR CASH ANY AND ALL OF THE OUTSTANDING
SHARES OF COMMON STOCK
OF
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to
Purchase, dated May 10, 1999, and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"), in connection with
the offer by WC-RMA Corp., a Delaware corporation (the "Purchaser"), and a
wholly owned subsidiary of Whitman's Candies, Inc., a Missouri corporation, to
purchase all of the shares of common stock, par value $.03 per share (the
"Shares"), of Rocky Mountain Chocolate Factory, Inc. (the "Company"), a
corporation, at a price of $5.75 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or, if no number is indicated in either appropriate space
below, all Shares) held by you for the account of the undersigned, upon the
terms and subject to the conditions set forth in the Offer.
NUMBER OF SHARES TO BE TENDERED:*
<TABLE>
<CAPTION>
SIGN HERE
<S> <C>
- ------------ Shares -------------------------------------------
Account Number: ----------------
-------------------------------------------
-------------------------------------------
Signature(s)
Dated: ---------, 1999
-------------------------------------------
-------------------------------------------
Please Type or Print Address(es) Here
-------------------------------------------
Area Code and Telephone Number
-------------------------------------------
Taxpayer Identification or Social
Security Number(s)
</TABLE>
- ------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU)
TO GIVE THE PAYER.
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer. All "Section" references are to the Internal Revenue Code of
1986, as amended. "IRS" is the Internal Revenue Service.
<TABLE>
<C> <S> <C>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
(1) Individual The individual
(2) Two or more The actual owner of
individuals the account or, if
(joint account) combined funds, any
one of the
individuals(1)
(3) Custodian account of The minor(2)
a minor (Uniform Gift
to Minors Act)
(4) a. The usual The
revocable savings grantor-trustee(1)
trust account
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust under
State law
(5) Sole proprietorship The owner(3)
account
</TABLE>
<TABLE>
<C> <S> <C>
GIVE THE EMPLOYER
INDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
(6) A valid trust, The legal entity (4)
estate, or pension
trust
(7) Corporate account The corporation
(8) Association, club, The organization
religious,
charitable,
educational, or other
tax-exempt
organization
(9) Partnership The partnership
(10) A broker or The broker or nominee
registered nominee
(11) Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title).
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME LISTED, THE NUMBER
WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE>
OBTAINING A NUMBER
If you don't have a taxpayer identification number, obtain Form SS-5,
Application for a Social Security Card, at the local Social Security
Administration office, or Form SS-4, Application for Employer Identification
Number, by calling 1-800-TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
PAYEES SPECIFICALLY EXEMPTED FROM WITHHOLDING INCLUDE:
1. An organization exempt from tax under Section 501(a), an individual
retirement account (IRA), or a custodial account under Section 403(b)(7), if
the account satisfies the requirements of Section 401(f)(2).
2. The United States or a state thereof, the District of Columbia, a possession
of the United States, or a political subdivision or wholly-owned agency or
instrumentality of any one or more of the foregoing.
3. An international organization or any agency or instrumentality thereof.
4. A foreign government and any political subdivision, agency or
instrumentality thereof.
PAYEES THAT MAY BE EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
5. A corporation
6. A financial institution.
7. A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
8. A real estate investment trust.
9. A common trust fund operated by a bank under Section 584(a).
10. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
11. A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
12. A futures commission merchant registered with the Commodity Futures Trading
Commission.
13. A foreign central bank of issue.
14. A trust exempt from tax under Section 664 or described in Section 4947.
INTEREST AND DIVIDEND PAYMENTS.--All listed payees are exempt except the payee
in item 12.
BROKER TRANSACTIONS.--All payees listed are exempt except for the payees listed
in items 11 and 14. A person registered under the Investment Advisors Act of
1940 who regularly acts as a broker is also exempt.
PAYMENTS REPORTABLE UNDER SECTIONS 6041 AND 6041A.-- These payments are
generally exempt from backup withholding only if made to payees listed in items
1 through 5 and 13. However, the following payments are made to a corporation
and reportable on Form 1099-MISC are not exempt from withholding:
- - Medical and health care payments.
- - Attorneys' fees.
- - Payments for services paid by a Federal executive agency.
GROSS PROCEEDS; ATTORNEYS.--Reportable gross proceeds paid to attorneys (under
section 6045(f), even if the attorney is a corporation, are not exempt from
backup withholding.
BARTER EXCHANGE TRANSACTIONS AND PATRONAGE DIVIDENDS.-- Only payees listed in
items 1 though 4 are exempt from backup withholdings on these payments.
PAYMENTS OF DIVIDENDS AND PATRONAGE DIVIDENDS GENERALLY EXEMPT FROM BACKUP
WITHHOLDING INCLUDE:
1. Payments to nonresident aliens subject to withholding under Section 1441.
2. Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
3. Payments of patronage dividends not paid in money.
4. Payments made by certain foreign organizations.
5. Section 404(k) payments made by ESOP.
PAYMENTS OF INTEREST GENERALLY EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
1. Payments of interest on obligations issued by individuals. However, if you
pay $600 or more of interest in the course of your trade or business to a
payee, you must report the payment. Backup withholding applies to the
reportable payment if the payee has not provided a taxpayer identification
number ("TIN") or has provided an incorrect TIN.
2. Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
3. Payments described in Section 6049(b)(5) to non-resident aliens.
4. Payments on tax-free covenant bonds under Section 1451.
2
<PAGE>
5. Payments made by certain foreign organizations.
CERTAIN PAYMENTS, OTHER THAN PAYMENTS OF INTEREST, DIVIDENDS, AND PATRONAGE
DIVIDENDS, THAT ARE EXEMPT FROM INFORMATION REPORTING ARE ALSO EXEMPT FROM
BACKUP WITHHOLDING. FOR DETAILS, SEE SECTIONS 6041, 6041A, 6042, 6044, 6045,
6049, 6050A AND 6050N AND THE REGULATIONS THEREUNDER.
EXEMPT PAYEES SHOULD COMPLETE A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT"
ON THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
PRIVACY ACT NOTICE.--Section 6109 requires you to provide your correct taxpayer
identification number to payers who must report the payments to the IRS. The IRS
uses the numbers for identification purposes and to help verify the accuracy of
your return and may also provide this information to various government agencies
for tax enforcement or litigation purposes. Payers must be given the numbers
whether or not recipients are required to file tax returns. Payers must
generally withhold 31% of taxable interest, dividend, and certain other payments
to a payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish
your taxpayer identification number to a payer, you are subject to a penalty
of $50 for each such failure unless your failure is due to reasonable cause
and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Willfully falsifying
certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
3
<PAGE>
PRESS RELEASE
FOR IMMEDIATE RELEASE
WHITMAN'S CANDIES SUBSIDIARY COMMENCES $5.75 PER SHARE TENDER OFFER FOR ROCKY
MOUNTAIN CHOCOLATE FACTORY, INC.
Kansas City, MO (May 10, 1999). Whitman's Candies, Inc. today announced that its
wholly-owned subsidiary, WC-RMA Corp., has commenced a cash tender offer for any
and all outstanding shares of Rocky Mountain Chocolate Factory, Inc. (NASDAQ:
RMCF) at $5.75 per share. Whitman's, based in Kansas City, Missouri, is an
affiliate of Russell Stover Candies, Inc., the country's largest producer of
boxed chocolates. Whitman's markets and sells a variety of candy and
confectionery products, including the famous "Whitman's Sampler" boxed
chocolates, throughout the world.
WC-RMA Corp.'s offer provides Rocky Mountain's shareholders a 64% premium
over Rocky Mountain's closing price on Friday, May 7, 1999 and a 73.1% premium
over Rocky Mountain's 30-day average closing price. The offer will expire at 5
p.m. EDT on Wednesday, June 16, 1999, unless extended.
In a recent press release, Rocky Mountain announced that earnings per share for
the fiscal year ended February 28, 1999 will be significantly lower than
previously anticipated. In that press release, Rocky Mountain cited a number of
factors as contributing to its lower earnings, including certain failures
relating to sales to distribution channels outside Rocky Mountain's system of
retail stores, incremental costs associated with the start-up and closure of a
remote packaging facility, production inefficiencies caused by facility space
constraints and the lack of a sufficient seasonal work force, product
overproduction problems and higher than expected third-party shipping costs.
Richard S. Masinton, Chief Administrative Officer of Whitman's, stated,
"Notwithstanding the problems Rocky Mountain Chocolate Factory has encountered,
we continue to admire the quality of Rocky Mountain's products and are impressed
by their company-owned and franchised stores. Rocky Mountain should take great
pride in their accomplishments to date."
Thomas S. Ward, Co-President of Whitman's, said that one of Whitman's priorities
would be to discontinue the sales of Rocky Mountain products in distribution
channels outside Rocky Mountain's system of retail stores. "The strength of
Rocky Mountain lies in the strength of its franchisees and their retail stores.
We believe that the production, operating and manufacturing efficiencies that
Whitman's can provide, together with the strong brand awareness and quality
reputation of Rocky Mountain will create a strong base of support for the
franchisee network. We would plan to work with the franchisees to continue to
expand sales and build on the Rocky Mountain brand name."
Whitman's said that the offer is conditioned upon, among other things, the
tender to the Company of a majority of Rocky Mountain shares on a fully-diluted
basis, the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, and Rocky Mountain's not
taking any defensive corporate action in opposition to Whitman's offer.
Nesbitt Burns Securities Inc. is serving as financial advisor to the Company.
D.F. King & Co., Inc. is serving as information agent for the offer.
This press release is neither an offer to purchase nor a solicitation of an
offer to sell any shares of Rocky Mountain. The offer is made solely by WC-RMA
Corp.'s Offer to Purchase dated May 10, 1999 and the related letter of
transmittal.
<TABLE>
<S> <C> <C>
Contact: Richard S. Masinton David Casper
Whitman's Candies, Inc. Nesbitt Burns Securities Inc.
1000 Walnut, Suite 900 111 West Monroe St.
Kansas City, Missouri 64106 20th Floor East
(816) 842-9240: phone Chicago, Illinois 60603
(816) 842-0156: fax (312) 461-3292: phone
[email protected] (312) 461-6327: fax
[email protected]
</TABLE>
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
May 10, 1999 and the related Letter of Transmittal and is not being made to
(nor will tenders be accepted from or on behalf of) holders of Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. In those
jurisdictions where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of WC-RMA Corp. by Nesbitt Burns Securities Inc. or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ANY AND ALL OF THE OUTSTANDING SHARES
OF
COMMON STOCK
OF
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
AT
$5.75 NET PER SHARE
BY
WC-RMA CORP.
A WHOLLY OWNED SUBSIDIARY OF
WHITMAN'S CANDIES, INC.
WC-RMA Corp., a Delaware corporation (the "Purchaser"), is offering to
purchase any and all of the outstanding shares of common stock, par value
$.03 per share (the "Shares") of Rocky Mountain Chocolate Factory, Inc., a
Colorado corporation (the "Company"), at a price of $5.75 per Share, net to
the seller in cash, without interest thereon (the "Offer Price"), upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
May 10, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). The Purchaser is a Delaware corporation and a wholly owned
subsidiary of Whitman's Candies, Inc., a Missouri corporation (the "Parent").
The Purpose of the Offer is to enable the Parent to acquire control of,
and the entire equity interest in, the Company.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1)THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN), A
NUMBER OF SHARES, WHICH, WHEN ADDED TO THE SHARES THEN BENEFICIALLY OWNED BY
[PARENT], PURCHASER OR THEIR AFFILIATES, CONSTITUTES AT LEAST A MAJORITY OF THE
TOTAL NUMBER OF SHARES OUTSTANDING, ON A FULLY DILUTED BASIS (THE "MINIMUM
TENDER CONDITION"); (2) EXPIRATION OR TERMINATION OF THE APPLICABLE WAITING
PERIOD, IF ANY, UNDER THE
<PAGE>
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT") (THE "HSR CONDITION"); (3) THE COMPANY NOT HAVING ENTERED INTO OR
EFFECTUATED ANY AGREEMENT OR TRANSACTION WITH ANY PERSON OR ENTITY (INCLUDING
ITS STOCKHOLDERS) OR TAKEN ANY ACTION HAVING THE EFFECT OF IMPAIRING THE
PURCHASER'S ABILITY TO ACQUIRE THE COMPANY OR OTHERWISE DIMINISHING THE
EXPECTED ECONOMIC VALUE TO THE PURCHASER OF THE ACQUISITION OF THE COMPANY,
AND THE COMPANY NOT POSTPONING ITS 1999 ANNUAL MEETING OF STOCKHOLDERS OR
TAKING ANY OTHER ACTION THAT WOULD IMPEDE THE PARENT'S ABILITY TO NOMINATE
ONE OR MORE DIRECTORS FOR ELECTION OR ITS ABILITY TO MAKE ANY OTHER PROPOSALS
TO BE VOTED UPON BY STOCKHOLDERS AT SUCH MEETING (THE "DEFENSIVE ACTION
CONDITION"); AND (4) SATISFACTION OF THE OTHER CONDITIONS SPECIFIED IN
SECTION 14 OF THE OFFER TO PURCHASE.
THE OFFER IS NOT CONDITIONED ON OBTAINING FINANCING.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 PM, NEW YORK CITY
TIME, ON WEDNESDAY, JUNE 16, 1999 (THE "EXPIRATION DATE"), UNLESS THE OFFER
IS EXTENDED.
The Purchaser expressly reserves the right, in its sole discretion, at any
time and from time to time, to extend for any reason the period of time during
which the Offer is open in accordance with applicable regulations of the
Securities and Exchange Commission, including as a result of the occurrence of
any of the events specified in Section 14 of the Offer to Purchase, by giving
oral or written notice of such extension to the Depositary (as defined in the
Offer to Purchase) and by making a public announcement thereof. During any such
extension, all Shares previously tendered and not properly withdrawn will remain
subject to the Offer, subject to the rights of a tendering stockholder to
withdraw any tendered Shares.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, tendered Shares if, as and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Shares for payment. Payment for Shares accepted pursuant to
the Offer will be made by deposit of the aggregate purchase price therefor with
the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payment from the Purchaser and transmitting payment to such
tendering stockholders. Under no circumstances will interest be paid by the
Purchaser by reason of any delay in making such payment. Upon the deposit of
funds with the Depositary for the purpose of making payments to tendering
stockholders, the Purchaser's obligation to make such payment shall be satisfied
and tendering stockholders must thereafter look solely to the Depositary for
payment
2
<PAGE>
of amounts owed to them by reason of the acceptance for payment of Shares
pursuant to the Offer. In all cases, payment for Shares tendered and accepted
for payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (a) certificates evidencing such Shares ("Share Certificates"),
or a timely confirmation of the book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase), pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (b) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry transfer, and (c) any other documents
required by the Letter of Transmittal.
If, for any reason whatsoever, acceptance for payment of or payment for any
Shares tendered pursuant to the Offer is delayed, or the Purchaser is unable to
accept for payment or pay for Shares tendered pursuant to the Offer, then,
without prejudice to the Purchaser's rights set forth herein, the Depositary
may, nevertheless, on behalf of the Purchaser and subject to Rule 14e-1(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
retain tendered Shares and such Shares may not be withdrawn except to the extent
that the tendering stockholder is entitled to and duly exercises withdrawal
rights as described in Section 4 of the Offer to Purchase.
The Purchaser will pay any stock transfer taxes incident to the transfer to
it of validly tendered Shares, except as otherwise provided in the Letter of
Transmittal, as well as any charges and expenses of the Depositary, the Dealer
Manager and the Information Agent (as defined in the Offer to Purchase). If any
tendered Shares are not accepted for payment for any reason pursuant to the
terms and conditions of the Offer or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased or untendered Shares will be returned, without expense to the
tendering stockholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedure set forth in Section 3 of the Offer to Purchase,
such Shares will be credited to an accountmaintained at the Book-Entry
Transfer Facility), as promptly as practicable following the expiration or
termination of the Offer.
Except as otherwise provided in Section 4 of the Offer to Purchase,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration Date
and, unless theretofore accepted for payment by the Purchaser pursuant to the
Offer, may also be withdrawn at any time after July 16, 1999.
If the Purchaser extends the Offer, is delayed in its acceptance for
payment of Shares or is unable to accept Shares for payment pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may,
3
<PAGE>
nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent that tendering stockholders are
entitled to withdrawal rights as described in Section 4 of the Offer to
Purchase. Any such delay will be by an extension of the Offer to the extent
required by law.
For a withdrawal to be effective, a written, telegraphic, or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Share Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then prior to the physical
release of such Share Certificates, the serial numbers shown on such Share
Certificates must be submitted to the Depositary and the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution (as defined
in the Offer to Purchase), unless such Shares have been tendered for the account
of an Eligible Institution. If Shares have been tendered pursuant to the
procedure for book-entry transfer as set forth in Section 3 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares, in which case a notice of withdrawal will be effective if delivered to
the Depositary by any method of delivery described in the first sentence of this
paragraph. Withdrawals of tenders of Shares may not be rescinded, and any
Shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by following
one of the procedures described in Section 3 of the Offer to Purchase at any
time prior to the Expiration Date. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Purchaser, in its sole discretion, which determination will be final and
binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Exchange Act is contained in the
Offer to Purchase and is incorporated herein by reference.
A request is being made to the Company, pursuant to Rule 14d-5 under
the Exchange Act, for the use of the Company's stockholder list and security
position listings for the purpose of disseminating the Offer to holders of
Shares. Upon compliance by the Company with such request, the Offer to
Purchase and the related Letter of Transmittal and, if required, other
relevant materials will be mailed to record holders of Shares or to brokers,
dealers, commercial banks, trust companies and similar persons whose names,
or the names of whose nominees, appear on the Company's stockholder list, or,
if applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
4
<PAGE>
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance, and requests for copies of the
Offer to Purchase, the Letter of Transmittal and other tender offer materials,
may be directed to the Information Agent or the Dealer Manager at their
respective addresses and telephone numbers set forth below. Holders of Shares
may also contact brokers, dealers, commercial banks and trust companies for
additional copies of the Offer to Purchase, the Letter of Transmittal or other
tender offer materials.
The Information Agent for the Offer is:
D.F. KING
77 Water Street, 20th Floor
New York, New York 10005
BANKS AND BROKERS CALL COLLECT: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 207-3155
May 10, 1999
The Dealer Manager for the Offer is:
[LOGO] NESBITT BURNS SECURITIES INC.
111 West Monroe Street, Suite 20E
Chicago, Illinois 60603
(TOLL FREE)
(877) 377-3317
5
<PAGE>
[LOGO]
COMMERCE BANK, N.A.
1000 WALNUT, 4TH FLOOR SWIFT: CBKCUS44
P.O. BOX 419248, INTERNATIONAL DEPT TELEX: 6715509
KANSAS CITY MO 64141-6248 ANSW BK: COMBANKKCI KSC
FAX: (816) 234-2799
PHONE: (816) 234-2854
WC - RMA CORP. Date: MAY 7, 1999
1000 WALNUT
KANSAS CITY, MO 64106
Our Reference: SB96003317
Standby Letter of Credit
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Currency/Amount USD 25,000,000.00
Up to USD TWENTY FIVE MILLION AND 00/100'S
Issue Date: MAY 7, 1999
Expiry Date: MAY 7, 2000
Expiry Place: AT OUR COUNTERS
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Dear Sirs,
At the request of our customer, WHITMAN'S CANDIES, INC., 1000 WALNUT, KANSAS
CITY, MO 64106, we hereby establish in your favor our Irrevocable Standby
Letter of Credit available with ourselves by payment of your draft(s) drawn
at sight on COMMERCE BANK, 1000 WALNUT, 4TH FLOOR, P.O. BOX 419248,
INTERNATIONAL DEPT, KANSAS CITY MO 64141-6248, when accompanied by the
following document(s):
Documents required:
1. ORIGINAL LETTER OF CREDIT
All drafts must be marked: 'Drawn under COMMERCE BANK, 1000 WALNUT, 4TH
FLOOR, P.O. BOX 419248, INTERNATIONAL DEPT, KANSAS CITY MO 64141-6248, Letter
of Credit Number SB96003317', and indicate issue date of this letter of credit.
Partial drawings are permitted.
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This is an integral part of L/C No. SB96003317 Page . . . 2
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This Credit expires on MAY 7, 2000. This Credit may be cancelled prior to the
expiration date upon our receipt of written consent to cancel from the
Beneficiary when accompanied by the original of the Letter of Credit.
1. Upon receipt of drafts in compliance with the terms and conditions of this
Letter of Credit, payment will be made within two (2) business days.
Unless otherwise instructed by the Letter of Credit terms, all charges are
for the applicant's account.
Documents must be sent directly to "COMMERCE BANK, 1000 WALNUT, 4TH FLOOR,
P.O. BOX 419248, INTERNATIONAL DEPT, KANSAS CITY MO 64141-6248."
We hereby engage with you that all drafts drawn under and in strict
compliance with the terms and conditions of this Letter of Credit will be
duly honored upon presentation.
Unless otherwise stated herein this Standby Letter of Credit is issued
subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision) International Chamber of Commerce, Publication No. 500.
Unless otherwise stated herein, upon receipt of documents in compliance with
the terms of this credit, COMMERCE BANK will remit payment per your
instructions.
COMMERCE BANK, N.A. COMMERCE BANK, N.A.
/s/ Margaret M. Novak /s/ Voytek B. Zmijewski
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(authorized signature) (authorized signature)
